"Big
picture, my perspective remains unchanged:
the long-term viability of the global
economy is being increasingly wrecked
by short-sighted policies focused
on avoiding short-term economic adjustments,
and at bottom, on avoiding the restructuring
of unserviceable sovereign, mortgage,
and financial debt. Yet only that
restructuring is capable of unchaining
the economy from reckless past misallocations.
Only that restructuring is capable
of unleashing robust new demand that
would form the basis for sustainable
economic activity and job creation.
You either pull the bad tooth, or
you provide every kind of pain killer
and symptom reliever, and let the
problem rot indefinitely." ~ John Hussman

"Immigrants
come with new skills and new ideas.
They fill a critical part in our labor
market. They work hard for a better
life. Not only do immigrants help
build our economy, they help invigorate
our soul." ~ former President George W Bush (hard to argue with a genius, a Yale
University cheerleader, who hosted 911 for America)

"Gold
value today and tomorrow will have
nothing to do with economic supply
and demand or the cost to mine it.
It will be forced to rise in value
to help represent trading wealth currently
held and trapped in Dollars. The Euro
could never do it alone. Of course,
Dollar hyper-inflation will gun the
process, but physical Gold in real
goods terms is heading way up! That
is why I laugh when people talk about
$700 or $800 Gold being about right.
That is not even close." ~ FOA (in year 2000 when Gold price was $285)

"Demand
for Gold American Eagles [coins] is
off the chart since Obama's re-election.
The continuation of the explosive
expansion of the money supply leads
inexorably to Armageddon-type inflation.
Furthermore, corrupt banks and governments
are selling contracts for Gold they
do not have and can never deliver.
So smart investors want bars and coins
only." ~ Tyler Durden (editor of ZeroHedge)

"Empty
your mind, be formless, shapeless,
like water. If you put water into
a cup, it becomes the cup. You put
water into a bottle and it becomes
the bottle. You put it in a teapot,
it becomes the teapot. Now, water
can flow or it can crash. Be water,
my friend." ~ Bruce Lee (applying to gold market,
buy what they give, move it where
it is permitted, and wait for the
liquidity problems to erupt patiently,
since the crisis will reach climax)

"Gold is a soft metal, but a hard currency." ~ Ronald Stoferle (formerly gold
analyst at Ernst Group, now fund manager
at Incrementum)

##
INTRO GOLDEN NUGGETS

◄$$$ WITH GUARANTEE OF ENDLESS FREE MONEY, STOCK INVESTORS LOAD ON MARGIN
DEBT WHILE THEIR NET WORTH PLUNGES.
INVESTORS ARE NOT IN A POSITION TO
DEFEND THEIR HIGH MARGIN LEVERAGE
IN STOCK HOLDINGS. THE STOCK MARKET
IS THE PROVINCE OF SUSPENDED VALUATION
WITH HIDDEN USGOVT PROPS. THE BIG
BANKS WILL JOIN THE NATION'S CITIZENS
AS MAJOR BAGHOLDERS. $$$

Margin debt in the US Stock market (NYSE) has
risen to an 18-month high. Net Free
Credit has plunged to minus $44 billion. Propaganda notwithstanding, like
the baseless report of a Fiscal Cliff
compromise, the data flashes disturbing.
While the stock indexes remains suspended
at its 2012 peak, despite the powerful
recession gripping the national economy,
investors are all in, fully invested,
duped to the end, sheep to be shorn.
The official NYSE Margin Debt as
of September 30th hit $315 billion,
a cool jump of $30 billion from last
month, and the highest since March
2011. That happened to be the
time at which the stock market took
a major swoon. No cash lies at the
ready to pay for margin calls in defense.
By contrast, the total Net Worth in
September was the lowest level since
April. The watchword is complacency
amidst blind trust held for the easy
money USFed policy. As the October
data arrived, the Margin Debt rose
again to $318 billion. However, the
flash signal is that Net Free Credit
fell to minus $44 billion, the lowest
since the summer of 2011. Net Free
Credit is defined as real disposable
cash to meet margin calls. The consequence
is simple. If the stock margin goes
into a decline, investors will have
to liquidate their leveraged positions
since they have no extra cash to maintain
the positions. The chart is pure ugly.
See the Zero Hedge article (CLICK
HERE).

◄$$$ THE ROMNEY HEDGE MUST BE PUT IN FOCUS. HE LOST THE ELECTION, BUT
WAS FORCED TO UNWIND HIS HEDGE. THAT
MEANT A POOR MONTH FOR GOLD IN NOVEMBER.
THE WINNER WAS GOLDMAN SACHS, WHICH
TOOKS FEES COMING AND GOING. $$$

Thanks to the London Siren for decifering the Romney hedge. It goes like this.
Goldman Sachs was well-known to be
the biggest contributor to Romney's
campaign. So it stands to reason they
would handle his finances, manage
his trades, including the election
hedge. The stock market perceived
Romney as bullish for equities and
bankers, hence bearish for Gold. Logic
dictates that the man would hedge
the possibility of losing the election.
That constitutes going long the Obama
trade, which is bullish for Gold,
bearish for equities. Notice the
stock market performed very well indeed
since election day for two weeks.
The rest is embellished, to make a
point. So Romney approached Obama
after the outcome was sealed, fraud
and all, to talk nice. The conversation
was not reported. Romney invited Obama
to take over the hedge, already in
the money as they say, which means
profitable. The president declined,
claiming the Powers That Be would
chop off hit little boy onions. So
reluctantly, Romney returned to GSax
and ordered the unwind of the entire
hedge position. The venerable crime
syndicate icon proceeded to dump the
Gold position and to buy the S&P500
stock index. That was the the story
for November. But best of all, GSax
earned the commish when the unwind
took place, just like it did when
the hedge was put on.

So GSax dumped Gold and bought the S&P, which enabled Romney to cover the
Gold short position and sell his S&P
position. Romney was long Gold, short
S&P. Notice a key point, how
the Gold vs S&P differential remained
stuck at 310 for days on end, which
tells you of the degree of control
during the great unwind. Its size
might indicate that he indeed expected
to lose, or better described, have
the election stolen. Remember that
thousands of Somali aliens votes in
Ohio, bussed in efficiently by the party machine, a state where a hundred
precincts recorded not a single Romney
vote.

◄$$$ NICK BARISHEFF OFFERED A KEY QUOTE ON GOLD AND FIAT CURRENCY. FIAT
CURRENCY LIKE THE USDOLLAR HAS A LIMITED
LIFE SPAN BEFORE A MAJOR CRISIS ERUPTS.
IT HAS ALREADY ERUPTED. THE REST IS
THE COLLAPSE AND DEFAULT. $$$

Nick Barisheff is the CEO of Bullion Mgmt Group, a firm with $650 million in
annual sales. He appeared on the USA
Watchdog radio show with Greg Hunter.
He made a great comment. He said,
"There has never been a fiat
currency in history that did not end
in hyper-inflation and complete collapse.
[Geithner's most recent call for an]
unlimited ceiling on USGovt debt for
the US was just telling the truth
on an open-ended money printing policy
[by the Fed]. All it is doing is postponing
a problem [until] it makes it bigger
and eventually it blows up. [It is
too late for remedies to the economy.]
We have passed the point of this getting
fixed. [A formal audit of the Fed's
official foreign gold accounts would
cause a] gigantic short-covering rally,
multiple bankruptcies, and a massive
loss of confidence in the dollar [because
much of the gold is gone or leased
out.] The Gold price could easily
double [from the current price]. What
has kept the price down is the artificial
leased gold going onto the markets."
Excuse my added comments denoted by
[--] to make the flow better, since
the guest made numerous references
in such context during the full interview.
See the Investment Watch interview
(CLICK HERE).

Fiat currencies always result in failure, whether debt default or unmanageable
debt or banking crises or distorted
financial markets or serious irreconcilable
trade imbalance. In the case of the
United
States and England,
add historically unprecedented criminal
fraud by the banks. The failure can
be foretold and anticipated, but the
exact pathogenesis can never be fully
laid out in advance. The only certainty
is the finite lifespan of fiat currencies.
The previous record before the USDollar
was 31 years. By means of corruption,
intimidation, and manipulation, the
USDollar has lived a record number
of years. However, that means the
crisis climax will be like nothing
ever seen before, when combined with
a nazi coup d'etat and rampant banker
corruption.

◄$$$ DIRECT USDOLLAR DEVALUATION IS A REAL THREAT. LOOK FOR SIGNS OF INDELIBLY
MARKING THE DOMESTICALLY HELD CURRENCY.
THEN PREPARE FOR A POSSIBLE FORCED
EXCHANGE FOR NEWER USDOLLAR BILLS
HELD INSIDE THE UNITED STATES BORDERS.
THE DEVALUATION MIGHT BE SOMETHING
LIKE 50%, AS IN ONE NEW BILL FOR EVERY
TWO OLD BILLS. $$$

It is becoming an increasing challenge to move large volumes of USDollars out
of the country. Primarily the big
US
banks are the obstacles and cooperative
agents to make it so hard. The tight
borders on capital controls mean they
are systematically trying to trap
domestic USDollars. Some alert
observers with a keen nose for devious
tactics suspect that the over the
course of four to six months, all
US-based currency will be replaced
in a secretive manner. Just a
theory, but with a purpose. It might
not be a sweeping new type of USDollar
bill design, but rather perhaps a
prominent red dot on the back, or
a glaring ZZ to begin the serial number.
There has always been a secondary
motive regarding currency decisions
to isolate syndicate money. Refer
to mafia but also drug cartel competitors
to the US Intelligence agencies. Later,
the marked bills will be replaced
by force with a steep devaluation
amidst public hue and cry. They
really do not need a marker on the
domestic USD to be set up for devaluation.
The economy will do the job, since
the USD will be rejected globally.
The impact would be to raise prices
across the entire USEconomy. The proposed
marker on domestic USDollars would
be a perfect plan for direct devaluation,
in an exchange of one new USD for
two old USD bills. Poof, a 50% devaluation.
The event could occur during a contrived
bank holiday event, by whatever means.

◄$$$ B.R.I.C.S. NATIONS ARE CHARTING A NEW COURSE FOR A FINANCIAL STRUCTURE
AS FOUNDATION. THEY HAVE MADE DEFINITIVE
MOVES AWAY FROM THE INSOLVENT WEST
AND THEIR CORRUPT PLATFORMS, CORRUPT
BANKER LORDS, CORRUPT DESIGNERS, AND
CORRUPT AGENTS. A NEW SYSTEM IS COMING
LIKE A GIANT FRESH BLANKET. AN IMPORTANT
STEP IS THE CREATION OF FINANCIAL
INSTITUTIONS TO PUSH OUT THE CORRUPT
RAFT OF TOOLS THAT FLOAT IN SUPPORT
OF THE CURRENT SYSTEM. FOR INSTANCE,
A DEVELOPMENT BANK IS BEING FORMED,
AN IMPRESSIVE STRUCTURE WITH $240
BILLION. $$$

The BRICS nations (Brazil, Russia,
India,
China, South Africa)
serve as the cornerstone to the anti-USDollar
movement, with China
the lead. They are in the process
of creating their own financial institutions,
a step of critical importance. The
Russian Finance Minister Anton Siluanov
announced the BRICS countries plan
to set up their own regional bailout
fund, which could be worth $240 billion.
That eclipses the Intl Monetary Fund
and the World Bank, which has a new
collection of executives. The BRICS
are frustrated, no patience left with
the Anglo-Saxon hegemony, as they
chart their own growth course leaving
the US and Europe to its own corrupted
bankers and vehicles such as the USFed,
the Euro Central Bank, the European
Commission, the Bank of England, the
IMF, the World Bank, the SWIFT bank
system, and the debt ratings agencies.

The regional fund could be similar in size to the Chiang Mai Initiative, which
is a crisis fund set up by China, Japan,
South
Korea, and the
ASEAN economies. The new regional
fund will allow the BRICS to create
their own system of mutual lending.
Any BRICS member will be able to draw
from the fund in proportion to its
own contribution, multiplied by a
coefficient yet to be determined.
The mutual fund will provide the group
its own financial reserve and remove
the need to appeal humbly to the IMF
and World Bank. Too many conditions
tilt favor to the big Western nations,
like austerity suicide pills and asset
grabs from linked collateral. The
fund could be used toward large scale
economic development issues faced
by the BRICS countries, as well as
to fund financial operations such
as currency interventions and loans
to big companies. Finally, the
fund may also be utilized strategically
to assist other nations to forge new
ties with the BRICS nations themselves.
This same group is close to framing
another development bank to be used
to fund infrastructure projects. Its
exact framework will be on the agenda
for the next BRICS summit in March
2013.

A major shared concern among the nations is the global crisis, and rising raw
material costs. Some facts emphasis
the BRICS role. China
and India
are the world's top agricultural producers.
Brazil produces more sugar and coffee than any
other nation. Russia
is a global leader in oil & gas
production, as China is in coal. When initiatives like the mutual
fund and the development bank become
a regular feature with broad usage,
the bloc's role in the global economy
will increase further. It is not
yet known which currency or assets
will be used to store the reserves.
The USDollar is an option, along with
the Special Drawing Rights (SDR) used
by the IMFund. The Chinese Yuan
is another option, likely to be opposed
by the other members. It would have
to be fully convertible as a condition.
The next step in strengthening cooperation
between the BRICS would be to extend
the role of national currencies in
trade settlement between member
countries. As a group, the BRICS
nations currently only hold a combined
11% of the Intl Monetary Fund voting
shares, a poor reflection of global
reality. Relatively small United
Kingdom and France each have larger voting
shares than any of the large BRICS
nations, an inequitable situation.
The developing nations behind BRICS
push for their own version of an IMFund.
The BRICS bank could begin by funding
projects in industries that the World
Bank refuses to support, such as biofuels,
large dams, and nuclear power plants,
which fail to meet its environmental
standards. See the Rossiyskaya Gazeta
article (CLICK HERE).

Rajeev Sharma of The Diplomat in India summarized the challenge
to devote a currency for usage. The
Chinese Yuan might eventually be tapped,
but probably only if added to the
IMF SDR basket. He wrote, "One
potential stumbling block the BRICS
face is deciding what currency(s)
to use for the mutual fund and development
bank. For a while now, China has been
pushing for its currency, the Yuan,
to be added to the Special Drawing
Rights (SDR), which is the IMF's international
reserve asset based on a basket of
currencies. China is likely
to view the BRICS institutions as
an avenue in which to boost the international
stature of its currency. Accordingly,
it is likely to advocate including
the Yuan as one of the currencies
the proposed institutions will use.
The other member states, however,
are similarly likely to resist Chinese
pressure in this area, and instead
push for using the USDollar or the
IMF SDR, which includes the Euro,
Japanese Yen, British Pound Sterling,
and the USDollar." See the
Zero Hedge article (CLICK HERE).

◄$$$ EUROPE IN A QUICK SURVEY OF SOMBER PERCEPTIONS.
$$$

In a paragraph that cannot do Europe justice, a summary of some major events. Italy is coming apart at the
seams. Mario Monti has one foot out
the door, in the process of being
disposed and deposed as king with
a Goldman Sachs crown. Monti is the
GSax insider tasked with stripping
Italy
of its assets and keeping all those
nasty derivatives tied down securely.
Uncle Silvio Berlusconi might be making
yet another comback, his first step
being to kick Monti onto the pavement.
He will be lucky not to be tossed
from the palace balcony. Berlusconi
wants to save Italy from the austerity and economic downward
spiral induced by Monti, but Silvio
must overcome his feuds inside the
Parliament. See the Washington Post
article (CLICK HERE)
and the Acting Man article (CLICK
HERE).

Meanwhile, Hollande in France is in big trouble already
as his deeper move toward socialism
has caused huge problems with capital
flight, resistance to higher taxes,
supply disruptions, and debt downgrade.
Next France
threatens to nationalize the steel
industry, a step sure to open the
door to huge inefficiencies and waste.
See the Business Week article (CLICK
HERE).

DeutscheBank concealed $12 billion in losses to avoid a government bailout.
The giant bank shows signs of fraud
to hide potential implosion. The story
broke from three former bank employees
who filed complaints to US regulators.
The chief of enforcement among the
regulators currently was none other
than the General Counsel of DeutscheBank
at the time. See the Zero Hedge article
(CLICK HERE).

Germans
are gathering increasing quantities
of gold. A recent survey showed that
the average German owns EUR 5750 worth
of gold in various forms. The SteinbeisResearch Center for Financial Services in Berlin
canvassed 2000 people. They found
that 32% of the gold owned in Germany in the form of bars
and coins has been accumulated since
the financial and economic crises
began in 2007. The number of Germans
with a net monthly income over EUR
4000 who say they plan to invest in
gold has doubled in the current year.
On average, every German owns around
117 grams of gold, consisting of 55
grams in jewelry and 62 grams in bars
and coins. See the German Local article
(CLICK HERE).

The UKGovt is reducing pension payouts due to the low returns gathered from
the pension funds themselves, a nasty
consequence of the ultra-low bond
yields. The position in the United Kingdom might be worse than in the United States regarding the
poor state of affairs with private
pension funds like the 401k. In the
UK,
the working professionals were lured
into building up the private pension
pots. However, with the near 0% interest
rates persisting, government actuaries
apply yields on low coupon government
bonds to slash pension payments by
50% or more. One pension company had
the audacity to tell a pensioner that
his fund will not pay out until he
turns 120 years of age. Thanks to
RobertW for comments across the pond.
The perception of London
as the UK version of the vampire
squid is forming gradually. It is
a criminal sink long recognized by
the Jackass. See the Rowans article
(CLICK HERE).

Turkey has rejected bans against doing business and banking
with Iran. Being very close to the skirmishes, the
London Siren commented, "The
Turkey
double-cross is starting to become
quite apparent and vocal. They were
insulted quite a few years ago, refused
entry into the European Union based
on religion (quite shameful). Now
China,
Russia,
and Iran are putting bacon on
the table for them while the West
focuses mainly on saber rattling.
The public in Turkey
is against this meddling in Syria.
As for the Syrian war, they are really
not doing much. The money comes
from Qatar and Saudi Arabia. The arms come from the United
States, the United Kingdom, and France. The military expertise comes from the
UK
and France. The soldiers and
cannon fodder come from illiterate
youth from the Middle East. Turkey is simply taking a commission for rent
in lending out their territory."
In war nothing seems to change over
the past century. See the PressTV
article (CLICK HERE).

##
GOLD PREPARES FOR LEAD ROLE

◄$$$ JPMORGAN INTERNAL RUMBLING. A STORY FROM A CONTACT IN SOUTHERN
CALIFORNIA. JPMORGAN IS SEEING HEAVY
GOLD DEMAND IN AN UNUSUAL WAY NOT
SEEN BEFORE, FROM ITS WEALTHY CLIENTS.
THE REQUESTS COME FOR USAGE OF EXTERNAL
VAULTS, NOT JPMORGAN VAULTS, SOMETIMES
FOREIGN VAULTS. $$$

The story will not reveal any identities or hints, by request of the source.
Paraphrase will be used, since quotes
are altered to make the story flow.
The contact of mine comes from an
urban center of California.
A person close to the family showed
up at a dinner, where a discussion
followed with his friend. Both younger
fellows work at JPMorgan, one an analyst
whose group manages investments for
High Net Worth clients. The minimum
requirement is $25 million in investable
assets. Some from the group involved
have clients with over $1 billion
invested. In an unsolicited comment
while talking about work, he said
something big is going on. The
JPM firm has received a significant
amount of calls for physical gold
in a recent week. Some really large
purchases for actual gold are being
sent to personal vaults, not public
or JPMorgan vaults. They want
it in their houses or outside the
United States in some cases
in foreign vaults. They do not favor
gold stocks or futures contracts or
mining stocks (or indexes) or Exchange
Traded Funds, all stated explicitly
as undesirable. The internal buzz
at the giant firm is how the demands
are extremely unusual. One can only
conclude that people are awakening.
Whether they believe in Gold more
than they trust JPMorgan is another
matter. The remark about being unusual
should be heard loud and clear, as
a corner has been turned on perception.

When the JPMorgan HNW client story was passed around for some feedback, an interesting
comment came back from my best source,
The Voice. He wrote, "A very
prominent female attorney is triggering
this movement to ship Gold out of
big bank client accounts. She and
her heavy duty clients are on their
way exiting the United
States. She has
a brain like a bacon slicer and always
does her homework. She must have someone
who told her how physical needs to
be structured in order not be at the
mercy of a crooked banks."
A quick interpretation, based on my
many interactions. The message means
he knows the prominent female attorney,
and might even advise her. Nothing
for sure, but 90% sure on the Jackass
translation. He is coy but never deceptive.

◄$$$ A CRITICAL SLAM ON PERTH MINT AS A BAD PLAYER. THE TARNISH ON THEIR
IMAGE IS STICKING AFTER A STEADY STREAM
OF NEGATIVE REPORTS. THE PERTH
MINT IS ILLICITLY USING CLIENT GOLD
BARS, REPLACING THEM WITH GOLD CERTIFICATES,
JUST LIKE THE CRIMINAL BIG BANKS IN
THE WESTERN FINANCIAL CENTERS. $$$

Dave in Denver wrote a negative account against Perth Mint, actually a story
passed along from a person with direct
contact. He made reference to the
TFMetals website, where the Jackass
has done interviews. Dave wrote, "I
just received an email from someone
who read my write-up. He told me about
an incident involving the Perth Mint and its custodial services. He wants
to remain anonymous because of Perth Mint's reputation for being about the nastiest and most litigious
people on the planet (in his words).

An
investment group who manages bullion
positions for some very large holders
was given the management responsibilities
for a very large bullion account that
was being held at the Perth Mint. When this group informed the Perth Mint about this and was told to hand custody of the account over,
the Perth Mint
sent the new management group allocated
Perth
Mint certificates in lieu of shipping
them the bullion. The group ordered
the Perth
Mint to have the bullion on the ramp
and ready for shipping within 72 hours.
The Mint claimed that was not possible
and could not honor that request.
The new group threatened to go public
with this incident if the bullion
was not provided as soon as possible.
Apparently the Perth Mint actually had to produce new bullion in order to fulfill
the legal demand and avoid public
exposure of this incident. He also
told me that this same management
group has had similar incidents with
supposedly vaulted Gold at a number
of Swiss Banks over the past few years.
We are talking 400-oz bullion bars,
not minted coins or 100-oz COMEX bars.
This person's final comment was, 'I
GET SICK OF READING HOW RIGHTEOUS
AND SELF-AGGRANDIZING THESE SCUMBAGS
ARE AT THE PERTH MINT. THESE CLOWNS HAVE MORE THAN THEIR FAIR SHARE OF SKELETONS
HIDDEN IN THEIR OWN CLOSETS.' "

See the TFMetals Report article (CLICK HERE
or HERE).
The Jackass has had contact with Dave
in Denver
on numerous occasions in the past,
always an honest player, always with
great insights and valuable information.
The Perth
Mint is dirty, hypothecating (stealing)
client bullion, covering their tracks
with Gold Certificates. They are
using client gold improperly, just
like the corrupt Wall Street banks,
the London
banks, and the Swiss banks.

◄$$$ VENEROSO WISDOM WAS COMMON AND DEEP AROUND 1999, FOLLOWED BY HORRENDOUS
MEGA-FORECAST CALLS. IF NOT RETIRED,
HE IS LIVING OFF HIS PAST SUCCESSES.
HE FORESAW THE RAVAGING EFFECTS OF
PAPER WEALTH GENERALLY. $$$

Frank Veneroso used to do some brilliant work, when serving as consultant for
several central banks in the West.
The following are all prescient quotes
taken from his work in 1999. In the
following years, he fell victim to
poor analytic vision, with several
dreadful calls about major commodity
prices. He expected them, like crude
oil, to fall and stay down as a result
of widespread deflation forces. He
would have therefore qualified to
join the Deflation Knuckleheads written
in the past by the Jackass, in particular
2010 and 2011, when the folly was
widely circulated. How any competent
analyst could ignore the powerful
monetary inflation perpetrated by
central banks and its direct effect
to encourage widespread hedging against
the USDollar debasement is beyond
my comprehension. But Veneroso used
to be brilliant, and deserves his
time in the sun with iced teas or
mai tais. Note the following wisdom
by Veneroso offered 13 years ago.
He referred to the ravages of inflation,
which is greatly under-stated and
under-reported. The US Stock market
must rise 8% per year to stay even
with inflation effects on prices and
purchase power. He expected gold mining
stocks to suffer, correctly. He expected
paper securities to suffer, correctly.
He expected the financial systems
built upon a paper foundation to suffer,
correctly.

Veneroso's first point is that short-term traders and gold mining stock investors
will suffer deep losses. His second
point is that physical Gold need not
be converted into paper currency,
since it will be desired in bullion
form as contract ownership falls victim
generally to ruin. His third and last
point is that fraudulent wealth has
turned into a cancer for the entire
financial system, where personal ownership
is of paramount importance. He clearly
warned that the entire Western paper
wealth system is a fraud, and will
come apart. He warns that when
the Gold market catches fire, the
USDollar will turn toxic, thereby
rendering most businesses unprofitable.
That is precisely the Jackass point
of ZIRP & QE killing capital,
eliminating profitabilty, ruining
businesses, and wiping out jobs with
income.

#1: "During the next five years, physical Gold is going to outlast and
outperform not only the current world
derivative gold market, but outlive
a large portion of the stockholders
equity in most gold mines. During
the Death Throes of the gold marketplace,
the dollar price could be all over
the map! Simply put, most short
term traders and long term paper gold
(gold stocks included) investors will
be eaten alive as we witness a
transition unlike anything ever seen."

#2: "There is a world of difference between saving real money as a wealth of ages
and trying to trade this world's paper
derivatives. The lasting wealth
of physical Gold does not have to
be converted into real things prior
to a currencies destruction. It already
represents the new holding everyone
will want. The coming Western
economic dislocation will devastate
all forms of assets that are held
in contract ownership.
Be they stocks (most gold stocks included),
bonds, businesses or savings accounts,
the loss of a major currency will
consume most of the equity these paper
items represent. It has happened with
every currency ever created and will
happen again with our dollars."

#3: "One of the unalienable truths that you speak of is that one cannot
own what he does not possess. The
entire dollar/debt economy is built
on the exact opposite of this concept.
That being, if you hold it in contract
form, you possess its physical equivalent
[which has been proved to be totally
false]. This can be extrapolated to
include US stocks, Treasury debt and
even dollars themselves. This wholesale
acceptance of fraudulent wealth has
lead an entire generation of Western
workers into saving nothing and thinking
it is something! Once any tiny part
of this concept is broken, it will
call into question the validity
of the entire paper asset world.
Break the Gold market pricing system
and you will break the dollar. Break
the dollar and the complete dollar
based business system becomes mark
to the market. A marking that brings
currency pricing in line with on the
minute supply of real things [in a
snapback to reality]. The resulting
dollar inflation will wreck the ability
of most businesses to function at
a profit."

◄$$$ SOME SILVER WHEATON ANALYSIS REVEALS A SUPERSTAR INVESTMENT
PROXY FOR THE SILVER PRICE. THEY WILL
CONTINUE TO SOAR, WHILE GATHERING
MORE SILVER IN INVENTORY. THEIR GOAL
IS 50 MILLION SILVER OUNCES HELD.
THEY AVOID THE COST SHOCKS SEEN IN
SOME MAJOR FIRMS, BY SIGNING LONG-TERM
CONTRACTS. THE STOCK WILL TRIPLE AGAIN.
ITS BUSINESS MODEL IS EXTREMELY ROBUST,
SECOND TO NONE. $$$

In an environment where many mining companies flounder, including some on the
Hat Trick Letter portfolio, Silver
Wheaton (SLW) stands out as a model,
an icon, a leader. They are not a
mining firm. They are a unique company
that gobbles up silver output from
large mining companies, as the silver
is not primary in production emphasis.
They set up long-term contracts to
take the silver byproduct typically,
locking in a low price paid per ounce
acquired. The mining firm wins by
locking in an important revenue stream,
and call the source streaming. The
SLW story will continue to burn bright.
Expect it to continue to rise in share
price, accumulate a mountain more
in silver bar inventory, and serve
as a tremendous proxy for silver.
The Sprott Silver Trust and Silver
Wheaton stand like twin pillars, my
favorites.

Christopher Barker points out in some good analysis that Silver Wheaton relies
upon four pillars of growth: 1) Through
gains in the price of silver, 2) through
increasing production as stream carrying
projects enter production, 3) through
the organic resource expansion of
its existing stream partners, and
4) through the forging of new stream
agreements. This growth capacity reflects
the incredibly well design foundation
of the company in the underlying business
model. By means of long-term contracts,
it can benefit from a fixed cost structure
on production from long-life assets
with promising exploration upside.
The partner mining firms absorb the
risk.

Silver Wheaton won another excellent contract over the summer, which augments
their silver stream in a transaction
with HudBay Minerals (symbol: HBM).
The SLW company has cited a goal of
building annual production from 28
million silver equivalent ounces (SEOs)
in 2012 to an incredible 48 million
SEOs by 2016. When they win some copper
in contracts, for instance, they convert
to silver equivalents for accounting
purposes. The firm is in a position
to continue to forge new deals, to
commit a portion of strong revenue
stream, and to build. They decided
to hold more Silver in inventory in
the last couple years, rather than
to sell it. Silver is money after
all, while paper feces from the USTreasury
is disguised debt. The recent recent
$750 million acquisition is yet another
stellar deal. The business model enables
its cash balance sheet to grow and
expand, in self-replenishment. Other
firms rely upon stock dilution for
expansion of projects and potential
growth. Silver Wheaton uses its income stream from all previous
deals to finance the next deal in
a purely non-dilutive manner, like
a string of pearls.

Some cost shocks for major mining firms bring attention
to the superior ancillary role played
by Silver Wheaton. Its contract strategy protects it from
the spiraling cost shocks. Look for some partner firms to force
SLW into contracts of shorter duration,
to more equally share risk. Consider
Barrick Gold, whose Pascua Lama mine
project has suffered mindboggling
cost increase estimates to complete.
The mine is located on the remote
Chile-Argentina border in the vast
Andes mountain range. The contract with Silver Wheaton supplied $625
million to Barrick Gold for 25% of
the project's silver output. At origin,
the sum represented nearly one-quarter
of the project's budget at the time.
Unfortunately for Barrick, that budget
has since expanded by 160% to reach
a staggering $8.5 billion in cost.
But Silver Wheaton will continue to reap 25% of the project's silver output, a
fixed ratio for its fixed amount invested.
Other firms face cost increases, and
as they do, they sacrifice a portion
of the mine output to the finance
agents that assist in furthering the
projects to completion.

As the costs rise, the standard finance deals will turn challenging for other
firms. It weakens commercial loan
avenues to the banks. It forces sacrifice
of significant slices in mine output
to venture capitalist parners. It
inhibits share investors when big
outlays are financed through secondary
stock offerings. Silver Wheaton is the beneficiary of these harmful effects on the run-of-the-mill
mining firms and their stock investors.
Thus the rationale for Jackass disdain
of mining stocks. SLW is not a mining
stock. Demand for project financing
is very strong, and the SLW approach
is very advantageous, well structured.
Still, look for partners to attempt
to shorten the horizon on the SLW
long-term deals. The underlying push
for SLW remains the rising Silver
price. See the Motley Fool article
by Christopher Barker (CLICK HERE).

CEO Randy Smallwood recently stated, "With currently more than $1 billion
in capacity, even after completing
our first payment to Hudbay, we have
one of the strongest balance sheets
in the industry and are very well-positioned
to achieve our goals. While we
believe there is a place for streaming
in any market given its unique benefits
and flexible nature, we think the
value of this form of funding is particularly
strong in this current market, where
access to traditional forms of financing
such as debt and equity remains very
challenging. Essentially, we look
for long-life low-cost operations
with strong management teams that
can survive all phases of the commodity
price cycle. We also look for assets
that have exploration or expansion
upside as this is key to increasing
a stream's value."

◄$$$ A GERMAN LAWSUIT AGAINST BARRICK HAS COME FORWARD. VERY LITTLE DETAIL
IS AVAILABLE. IT IS WORTH BRIEF MENTION.
IF BARRICK LOSES, THEN THEIR MAIN
REVENUE STREAM IN AFRICA
WILL BE FORFEITED. $$$

Apparently, the large African mining rights and claims by Barrick are being
challenged in German courts, involving
Duboise. A local German industrialist
holds the mining rights that Barrick
claims are theirs. Some of the most
important Barrick licenses have expired
in Africa. The
plaintiff Duboise has re-registered
them in his name. It is a very complicated
and complex case. The chance that
Barrick will be denied many such lucrative
African claims is high, with the giant
pulling the short end of the stick.
Time will tell from the litigation
outcome. If Barrick loses the case,
the firm stands to lose its most important
asset to produce Gold in the world
in Africa. Few
realize that the scummy firm must
repay DeutscheBank for a multi $billion
Gold forward contract. The firm Barrick
is tied with the most nefarious and
corrupt banker firms on its executive
boards, and has served as a key tool
in the gold suppression projects over
two decades. We do not wish them good
fortune in the court case. Their executive
history has been dominated by bankers,
not mining engineers. Their specialty
has been forward sales of gold, coordinated
with big banks and the central banks
of the US,
the UK,
and Canada. If Barrick loses its
principal income stream, it would
be cause for celebration. The output
would continue, but under a different
(more honest) name and roof.

◄$$$ TURKEY AND THE U.A.E ARE SWAPPING
GOLD FOR GAS. IT LOOKS LIKE TURKEY AND THE U.A.E. ARE "FENCES" OR
BROKERS FOR OTHER COUNTRIES. THE IRAN WORKAROUND WILL LATER FORMALIZE INTO A GREATER
PLATFORM FOR TRADE. CERTAIN TRADE
ROUTES ARE BEING TESTED, OUTSIDE THE
SHADOW OF ANGLO CONTROLS. $$$

Turkey has confirmed that Gold exports are
linked to purchase of Iranian natural
gas. The outcast nation of Iran
is not without friends. Iran
has been purchasing between $1.5 and
$2.0 billion in gold bullion per month
in order to satisfy trade payments.
To Turkey has gone the ample supply of Iranian natgas.
The Ankara
officials in Turkey are not interested in complying with meddlesome
and diversionary games orchestrated
by the US, the UK, and its tail ally. Bear in mind that Turkey
has almost stood alone in objecting
to Gaza
violence, sending medical supplies
to the zone. To be sure, Iran is using creative ways to sidestep Western
sanctions over its disputed nuclear
program, since being frozen out of
the global banking system. The United
Arab Emirates
has been another key player in receiving
Turkish gold, clearly as a weigh station
onto Iran destination. The volumes surged following
the March, when sanctions were put
in place. See the Wall Street Journal
article (CLICK HERE).

Some lazy analysts might make nothing of the Iran
and UAE connections with Turkey.
They would be very wrong. The
Jackass believes we are starting to
see the first face, even a test run
of the trade settlement system coming,
which will have a gold core.
Gold is being circulated as payment,
after being acquired for a banking
trade function. When posed with this
hypothesis, my gold source The Voice
replied, "Your observations
about trade settlement system being
tested are intriguing and make a lot
of sense." For him, the
words are laced with under-statement.
He is confirming with a slam of his
quiet fist on the table. He is part
of the design team for portions of
the complex alternative trade settlement
system itself. It will have a Gold
Core on short-term notes, to manage
Letters of Credit. He cannot speak
freely, but the Jackass can interpret
reliably.

The Voice is not known for calm tranquil comments. So regard his comments
as a strong hint that Turkey is playing a vital
role as test case in Gold payments.
More common are his descriptions of
razor wire up banker rectums, smart
clients or colleagues with brains
like bacon slicers, the derivative
machinery being sabotaged by big Eastern
shoes without potential for recovery,
or central bankers shoveling their
own feces before their steps, or rock
& roll bands vanishing from view
as the entire stage collapses during
a concert (like the USDollar monetary
system). For a man with English as
his second language, his command of
imagery is both excellent and entertaining.
He is trilingual, with full fluent
command of another major language
useful in German trade dealings, using
a different alphabet. My admiration
for bilinguals is utmost. The Jackass
has the makings of trilingual, but
the French never developed from school
days into conversational. The Spanish
is a work in progress, with recognition
of it spoken the biggest challenge.
Just airport and reading skill on
the French. C'est dommage! Pas de
quoi!

##
GOLD PRICE SOON TO SHED HARNESS

◄$$$ THE STAGE IS SET FOR ARBITRAGE OF THE HIGHER SHANGHAI
GOLD PRICE. A SNAPSHOT OF DECEMBER
7TH REVEALS THE DIFFERENTIAL. THE
POTENTIAL FOR ARBITRAGE EXISTS, WHICH
COULD CONCEIVABLY WRECK THE C.O.M.E.X.
BY DRAINING IT. THE SUPPLY COULD GO
TO SHANGHAI FOR
SALE. OF COURSE, THE NEW YORK GANG COULD REFUSE TO MAKE DELIVERY, OR
STEAL MORE CLIENT ACCOUNTS LIKE WITH
MF-GLOBAL. THE PRICE SPREAD WILL EVENTUALLY
BECOME A TOPIC FOR COMPLIANCE AND
RISK DEPARTMENTS TO ADDRESS, AS THE
MARKET WILL BE COMPELLED TO EXPLAIN
THE DISCREPANCY FROM A CORRUPT MARKET
IN THE UNITED STATES. $$$

Thanks to the London Siren for reporting on the price differentials between
the COMEX and Shanghai Gold price,
which are not minor. A price arbitrage
of $20 to $25 is plenty to capture
and to exploit. Consider a snapshot
taken on December 7th. The Shanghai
Gold contract closed at 1728. At no
point did the Gold price on the COMEX/Globex
trade at that level overnight, no
touch. Alert parties with a global
footprint will start arbitraging this
differential, since they can. They
could sell gold in Shanghai, but buy gold on COMEX. Anyone doing that
would essentially be going against
the cartel with threat to bust the
COMEX. The roadmap is there, which
can be implemented for quick exploit.
Some logistics could interrupt the
process. If supply is taken in New
York, the gold bars must be shipped
to Shanghai for sale and delivery. That might cost
must be managed in arbitrage, if indeed
delivery is permitted and taken. The
New
York side might refuse to deliver
if they see what is being done. They
also might attempt to engineer a more
targeted account theft if they could
isolate the party conducting sales
in Shanghai.
It will be interesting to observe
if the price differential expands.

Update with another snapshot taken on December 13th. The COMEX Gold futures
contract was trading at 1691 at one
point when the London Siren checked
the price. The Shanghai Gold price
closed at 1715. At no point did gold
trade anywhere close to 1715 on COMEX
overnight, no touch. The differential
was $24 at that snapshot, equal to
a tiny 1.4% spread. Note also, the
COMEX Silver futures contract was
priced on December 13th at 32.65,
while at the India MCX it was 35.46,
a very wide differential of 2.81 per
ounce, equal to a ripe 8.6% spread.
The COMEX Platinum also offers arbitrage
potential, since the COMEX Platinum
futures price was 1616, but in Shanghai at 1690. The dislocation between COMEX
prices and Shanghai/India prices continues
to grow, equal to a 4.6% spread. Execution
of the arb trade is possible, just
must be managed with certain challenges.

The London Siren made some conclusions. He wrote, "Some points are important
to understand in sequence. 1) The
Gold arbitrage is a tool that China can now use against
JPM, GSax, USFed, USGovt, USTBonds
anytime they want to cause a systemic
failure. 2) They do not have to sell
USTBonds as most people believe, since
they now have an alternative weapon
of mass financial destruction in the
arbitrage. 3) China
is now the price setter for gold.
They would not start trading gold
in Shanghai unless very confident about its success.
4) This is another step in making
the Chinese Yuan a reserve currency,
toward enabling its free convertiblity
into Gold in size."

Thorny issues must be addressed eventually, which strike at the heart of the
corruption behind the COMEX. Compliance
and Risk Departments must determine
which is the true market price, and
at what price client positions are
marked to market for equity determination
and margin calls decisions. The logistics
would not be any formidable challenge
to a wealthy well-equipped merchant
player in execution of arbitrage trades
to exploit the price spread. A $25/oz
spread translates to a $80.4k arbitrage
potential gain per kilogram. A private
jet could be secured to manage the
transported bullion bars, loaded with
several hundred kilograms. The key
is actual delivery taken in the devil's
den of New York. Sophisticated traders with big accounts and big vault space
and assistant mules in both locations
could conduct the arbitrage trades.
However, unless physical bars move,
the trades remain trapped within the
paper world on the two sides, separated
by a wall (two distinct markets) and
ocean. Contracts are not interchangeable.
Other risks would be from robbery
by employed JPMorgan thugs or hired
Blackrock thugs or dedicated FBI thugs
working under the USGovt badges. If
believed far-fetched, then naive to
the core. The level of financial crime
and protection by USGovt law enforcement
and security agencies is astonishing,
backed up by the US courts. The FBI protected
Goldman Sachs when their UNIX box
for snagging order flow data was stolen
by the Russian employee. They painted
the Russian as a theif and protected
the venerable GSax putrid house.

◄$$$ CENTRAL BANK GOLD HOLDINGS ARE ON THE RISE, DUE TO EASTERN BUYERS
AND MUCH SMALLER WESTERN OFFICIAL
SALES. $$$

Central banks have begun to shun the sovereign bonds since 2009. They sense
the death of the USDollar as well
as the Euro. The profound distress
in Euro Govt Bonds from the Southern
nations accentuates the distress.
However, on the US side the ultra-low yields on the USTreasury
Bonds also highlights distress of
a different kind. The USTBonds are
supported by interest rate derivatives
with $trillions leveraged behind them,
to prevent a collapse of the US
bond market due to chronic $1.3 to
$1.5 trillion in deficits and almost
non-existent foreign demand. The Asians
generally observe the Western breakdown,
and the extraordinary mechanisms to
support the broken Govt Bond markets.
So Eastern central banks are buyers
of Gold bullion to rack up their reserves
for the storm and the unspeakable
liquidity surges from monetary growth
Weimar
style. They also are better aware
of the Chinese-led movement to establish
an alternative trade settlement system
outside the USDollar, in an Asian
defiant initiative.

As of year 2012 through the third quarter, the net increases in central bank
holdings were 268 metric tons (8616
million oz), led primarily by emerging
market central banks. The official
sector has now been a net buyer of
gold each year since 2009. The corrupted
central banks in the developed (as
in development of corruption and paper
shill games) have sold much smaller
quantities of gold than a decade ago
from official sales. Bear in mind
that probably at least half of the
official gold claimed in Western inventory
is gone, sold through secretive leasing
over two full decades. The important
part of the chart is the change in
direction for gold holdings (bars),
not the amount.

◄$$$ GOLDMAN SACHS HAS CALLED THE END OF THE GREAT GOLD BULL MARKET. THEY
SERVE AS A SOLID CONTRARY INDICATOR
WITH OBVIOUS INTERNAL BIAS. YET ANOTHER
SECOND HALF RECOVERY FORECAST HAS
BEEN ISSUED (IMPRESSIVE DESPERATION),
ALL OF WHICH HAVE PROVED TO BE BASELESS
CALLS JUST FAR ENOUGH AWAY TO BE OUT
OF TOUCH. THE ENTIRE GOLDMAN CALL
COMES AFTER THE PERMANENT Q.E. TO
INFINITY MONETARY POLICY WAS CEMENTED
FIRM AND FIXED. MORE GSAX DISHONESTY
TO FLEECE ITS CLIENTS AND DUPE THE
PUBLIC. $$$

Goldman Sachs is a bastion of dishonesty, deceit, and treachery. Their Vice
Presidents make the grade only after
proving a financial fraud on their
resumes (a fact!). Their deeply entrenched
corruption assures them of control
of the USGovt Treasury offices, whose
gold bullion they stole under the
Robert Rubin watch during the Clinton
Admin. These are crime syndicates
at work. In early December once
more, Goldman Sachs issued a pair
of ludicrous forecasts, one on the
economic resuscitation, the other
on the top for the Gold market.
Both are as baseless as they are self-serving.
Not two weeks passed since USFed Chairman
Bernanke announced reassurance of
continued ZIRP (0% free money) and
QE (bond monetization) to prevail
through 2015. They wish to assure
the USTBond carry trade players on
Wall Street not to quit. They admit
the USGovt finances cannot withstand
a rate hike to normalcy. They will
never succumb to revealing their vast
interest rate derivative machinery
that supports the broken USTBond market.
In no honest world would the gargantuan
USGovt annual deficits over $1.3 trillion
be financed at near 0% for four consecutive
years with their traditional buyers
making big retreats.

So enter Jon Hatzius, the well-spoken clownish German whiz kid residing on Wall
Street and London, lavish condos in both locations. He made
a supposed important forecast at the
turn of December. He expects the sub-par
post-crisis growth for the USEconomy
to come to an end in the second half
of 2013. Once more, the corrupt band
of bond fraud kings rely upon the
hackneyed Second Half Recovery. Wow!
impressive! Hatzius has reverted
to a hack role to shove the overused
placard on stage. We have not
seen it trotted out since 2008. It
was trotted out in intellectual corrupt
fashion in 2006, in 2007, in 2008,
but replaced in 2009 by an even more
corrupt Exit Strategy malarchy. All
the nonsense has been correctly dismissed
by the Jackass in real-time. Capital
investment is on the decline, as in
the National Diffusion, as are the
payroll tax receipts, as is the railway
shipment indicator, as is the FedEx
indicator.

Dismiss the Hatzius call as rubbish. In several years, the Jackass has observed
Hatzius as being rather competent
and not a tool to be used on stage.
This is a surprising vapid useless
forecast. If valid, then the USFed
would not have been forced to conduct
a QE3 bond program or to assure the
ZIRP (0% policy) for another three
years. Shame on Hatzius! Neither
would be necessary, since a wondrous
recovery was taking root. Rubbish!
If Hatzius had any great ability as
an economist, he would realize that
the combination of ZIRP & QE in
indefinite duration and unlimited
dosage means that capital within the
USEconomy is under tremendous pressure
from cost increase and profit squeeze.
If Hatzius had any great ability as
an economist, he would realize that
the ObamaCare nightmare will conspire
with the food price hikes to take
free cash directly out of small businesses
and to take disposable income directly
out of the discretionary spending
equation. If Hatzius had any great
ability as an economist, he would
realize that the presence of China
has removed the traction gear and
any capability of the USEconomy to
respond to ultra-low interest rates.
The United
States is mired
in a death spiral, while the USFed
monetary policy is a death sentence.

So Goldman Sachs expects another mysterious mythical but convenient second half
recovery to arrive. The Jackass point
has always been that to announce a
second half recovery seven months
in advance is far enough in the future
to disregard later when memories fade.
It is far enough in the future to
claim that other extraneous events
interfered with a true opportunity
to recover, the blame usually on commodity
markets generally or the nasty Arabs
for high energy costs or the ambitious
Chinese for wishing to topple the
Western kings of finance. The Second
Half Recovery call is akin to a rescue
by the Easter Bunny next year, riding
on a White Horse.

Goldman Sachs followed their inept or insincere economic
rebound call with an equally corrupted
baseless call for a top in the Gold
Market. Imagine, the USFed announced
ZIRP forever and QE to Infinity, yet
the Gold market will remain calm and
tranquil in the midst of free money,
endless bond buying with electronic
bits, and a debasement of the USDollar
to go down in history to rival the
Weimar episode. Trillions of scattered USDollar confetti
will undermine the USDollar, prompt
an economic recovery, but force a
stall in the Gold price. How laughable!
How desperate! Call me competent and
no team player, but methinks the Gold
price will rocket higher in future
months when the Tag Team of Diabolical
Bankers glues their Weimar Foot on
the monetary pedal, and loses their
chokehold on the Gold Market from
rising global awareness. The putrid
brain trust at Goldman Sachs actually
claimed that in the medium term, the
gold outlook is caught between the
opposing forces of more Fed easing
and a gradual increase in US real
rates on better US economic growth.
Expect no USFed rate hikes, period!

The sophisticated expanded modeling at the House of Goldman suggests that the
improving US growth outlook will outweigh further USFed
balance sheet expansion and that the
cycle in gold prices will likely turn
down in 2013. Excuse me, but they
have trotted out the other marquee
bullcookie placard of an Exit Strategy.
The central bank is stuck at 0%
official rate forever, and unlimited
bond purchases forever. Let me
repeat, FOREVER. Four full years of
extreme accommodation without a hint
of healed financial structures, and
promises through year 2015, together
translate to FOREVER in our world.
Well, at least until the USGovt debt
default, or a systemic seizure in
the US banking system, or else
basic supply chain disruptions from
inadequate capital structure critical
mass. They call upon risks to their
growth outlook given the uncertainty
around the fiscal cliff. The GSax
forecast analysis is not worth a six-pack
of double-plied toilet paper, or a
small carton of candy bars.

The Gold Bull market is powered by negative real rates,
by debasement of the USDollar, by
toxic sovereign bonds, by banking
system insolvency, and by general
hyper monetary inflation. All such factors are stuck immutably
forever and a day. The only factor
holding down the Gold price is the
corrupt naked shorting of giant slices
of global gold output in the futures
market. The big US banks are immune from prosecution on unlimited
naked shorting, the sale of metal
in contract terms without benefit
of any metal supply. The entire financial
system is at extreme risk of breakdown
and collapse. It might not happen
in an isolated manner, but rather
in a complete manner. The Western
bank wizards and maestros operate
on borrowed time, late in the game,
the hourglass of sand having descended
totally.

◄$$$ MORGAN STANLEY HAS GONE IN OPPOSITION TO THE GOLDMAN SACHS GOLD TOP
CALL. THEY POINT TO THE EXTRAORDINARY
USFED MONETARY POLICY OF ENDLESS Q.E.
BOND PURCHASES. MORGAN STANLEY EVEN
SUGGESTS THAT QE4 IS SOON TO BE ANNOUNCED.
THEY ACTUALLY MENTIONED NEGATIVE REAL
RATES AS SUPPORTING THE GOLD PRICE.
WHAT A COMPETENT VIEWPOINT! $$$

Just one day after the shameless scoundrels at Goldman Sachs suggested their
clients should sell their gold during
this so-called Gold top in the cycle,
Morgan Stanley announced a stern
disagreement. The other Wall Street
firm with more of a commodity specialty
in-house heralds Gold as its preferred
fundamental metal exposure for 2013.
They expect Silver to outperform also.
They reiterated how the fundamental
thesis for owning Gold is firm and
fixed, linked to the adoption of QE3
and possibly a QE4. They pointed out
a coordinated movement among key central
banks to debase the major global currencies.
The Morgan Stanley mavens (competent
surprisingly) added that low nominal
and negative real interest rates,
ongoing geopolitical risk in the Middle
East, and continued mine supply issues
are also supportive.

Morgan Stanley amazingly seems to be buying what GSax is selling. Interesting,
their opposing views in the battle
of bulge bracket is entertaining.
GSax wishes to buy what their clients
are selling, as they cull the stupid
clients out of existence, a predatory
maneuver. GSax might be migrating
from USTBonds to Gold. See the Zero
Hedge article (CLICK HERE).
The contrast is incredible. Goldman
Sachs calls the Gold market at a top,
based on a mythical USEconomic recovery
in 2H2013. Morgan Stanley calls Gold
their favorite metal for 2013, based
on QE3/QE4 and negative real rates,
the constant main cylinder on the
Gold Locomotive.

◄$$$ THE S.L.V. EXCHANGE TRADED FUND FUND WAS DRAINED OF 2.0 MILLION OZ
SILVER ON NOVEMBER 23RD, AS THE GRAND
DEPLETION ACCELERATES. THE BANK CARTEL
IS RUNNING OUT OF MAIN CHANNELS OF
SUPPLY. THEY TURN TO A VISIBLE SUPPLY
WITH RISK OF DETECTION. $$$

To be clear, the Jackass contends that the SLV exchange traded fund is being
actively gutted of inventory by the
big US
banks. The investors are true sheep,
clueless to the end, almost deserving
at this point in the Great Gold Game
to be bagholders. To be fair, some
use the SLV as a trading tool for
price movement effectively. Still
too many investors believe they own
silver metal, when they own dazzling
paper certificates with ornate print,
impressive embossing, nifty etchings,
and worthless seal. The irrepressible
Turd Ferguson tracks the SLV inventory
like a hawk. He noticed on November
23rd, the SLV fund lost 1.984 million
oz of silver on that single day. In
one week the SLV fund lost over 7.648
million oz in metal held in inventory.
Curiously, the Silver price rose
$1.62 from $32.50 to $34.11 during
that week. In the same time span,
the Sprott premiums collapsed, PSLV
at 0.77% and PHYS at 1.17% respectively.
Ferguson
speculates that some big player like
a bullion bank sold their shares to
a different party who wanted physical
or to a distinctly different ETFund
that holds physical metal in inventory.
Ferguson wondered aloud as to motive,
like an issue with the Fiscal Cliff
that is not widely known, or Germany
demanding that Greece retrieve Gold
held in New York or London, or a downgrade
for either USGovt debt or UKGovt debt
been decided.

◄$$$ SPROTT CLAIMS SHORTS MAY NEED TO DELIVER 40 MILLION OUNCES OF SILVER.
NOTE THE SILVER LEASE RATE DATA HAS
STOPPED BEING REPORTED, MORE DARKNESS
FOR THE CRIMINAL SYNDICATE. CONCLUDE
GREAT STRESS BEHIND THE SILVER MARKET.
$$$

Precious metals prince Eric Sprott spoke with King World News about key players
on the COMEX that stand for delivery
of up to a staggering 40 million ounces
of silver. Sprott diligently follows
the Silver market for clues of the
corrupt stranglehold loosening. He
is on record stating that if large
Sprott Fund orders are not met, he
will go public and disclose as much
of the details as possible concerning
the corruption. Note well that
the Silver lease rate reporting has
been eliminated. Interpret the
imposed darkness as a signal that
great stress lies behind the curtain
from view. Sprott expects additional
pressure to come from China,
whose citizens are lining up to buy
more gold coins. As a nation, they
distrust the West and their kooky
paper money. They distrust the Chinese
kooky paper money too. Sprott expects
constant strong pressures on the Silver
market from delivery demands, each
month. The December contract has a
small legion of investors having filed
under Notice for Delivery, like almost
40 million ounces silver. He expects
a COMEX failure sooner or later, nothing
specific, since nobody knows. He said
we have the makings of such a failure
at any time. See the News Doors article
(CLICK HERE).

Financial expert and industry icon Eric Sprott claims the physical gold in
Western central banks is likely gone,
due to selling it into the market
with motive to keep gold prices low
and to continue the illusion of stability.
Sprott is always worth watching and
listening to, a man with strong integrity,
deep commitment to the Gold movement,
with solid awareness of many inner
workings to the currency and metal
world. Every several months, he is
tasked with sourcing gold and silver
metal for the Sprott Trust Funds for
the precious metals. The challenge
is always revealing. See the USA Watchdog
interview (CLICK HERE).

China's October Gold imports from Hong
Kong were 47,478 kilograms, disclosed
on the HKGovt website. The imports
continue to decline but from an enormously
high level a year ago. It is difficult
to call 47.5 metric tons a paltry
or disappointing sum for a single
month. Gold imports to China from Hong Kong dropped
32% in October from a month earlier.
The slower economy inside China resulted in
less demand. The total imports including
scrap and coins compared with 69,712
kilograms in September. Versus a year
ago, the reduced demand is more evident.
Shipments were 45% less than the 86.3
metric tons one year earlier. Put
the gold import into better aggregate
perspective. However, shipments
more than doubled to 629.3 metric
tons in the first 10 months from 290.0
metric tons one year ago. Official
data comes from the Census & Statistics
Department of the Hong Kong Govt.
Despite all the hubbub in the economist
drivel, the Chinese Economy is set
to expand 7.7% this year, although
the weakest pace since 1999. The import
phenomenon is new and rocketing higher,
which complements the domestic Gold
output, none of which goes to export.

◄$$$ HUGE SILVER ORDERS HAVE BEEN RECORDED, AS LONDON
SEEKS SUPPLY. ON DECEMBER 6TH, FOLLOWING
AN AMBUSH DURING THE WEEK, GOLD &
SILVER REGAINED THE $1700 AND $33
PRICE LEVELS ON A SINGLE 10-TON PHYSICAL
GOLD ORDER. WITNESS EXTREME INVENTORY
SHORTAGE IN LONDON, BY VIRTURE OF AN UNUSUAL OTHER ORDER BY A UK-BASED HEDGE FUND.
$$$

The date of December 6th will be marked as a reverse Pearl Harbor Day. After
the standard COMEX open waterfalls
replete with naked shorting on gigantic
volumes, which took the Gold price
as low as $1684 and the Silver price
under $32.50, both metals made a vertical
move to the upside around 10am EST.
Gold quickly cleared $1700 in trading,
if a corrupt market can be called
trading, while Silver quickly cleared
$33, both measures per ounce. The
impetus for the move, according to
internal observers, appeared to be
a massive physical gold buy order
in the range of 10 metric tons. The
Silver Doctor also experienced a unique
event, a very large order that was
hardly typical. The SDBullion outfit
was approached by a UK hedge fund manger seeking
the acquisition of 20 metric tons
of gold in good delivery bar form.
That means bars physically tested
for purity above 0.9995 within the
past five years. The event must be
digested slowly and deliberately.
For a London fund manager to resort to contacting US retail bullion dealers
in attempt to fill a 20-ton gold order
speaks volumes. Clearly, the lack
of available physical gold for delivery
in London can be concluded, verifying the extreme tightness in the physical
market. Perhaps a test of the Silver
Doc capability. See the Silver Doctor
article (CLICK HERE).
In the Jackass opinion, the Silver
price will zoom north as an indicator
of extreme duress in the precious
metals market. The inventory is fast
vanishing amidst a controlled artificially
low price.

◄$$$ INDIAN HOUSEHOLDS HAVE AMASSED A STAGGERING AMOUNT OF GOLD IN SAVINGS,
GREATER THAN THE MAJOR CENTRAL BANKS
COMBINED. THE NATION DISTRUSTS PAPER
WEALTH, AN ARTIFACT OF THE BRITISH
COLONIAL ERA. EFFORTS TO HALT IMPORTS
AND RENDER HARM TO THE RUPEE EXCHANGE
RATE HAVE NOT SUCCEEDED. THE INDIAN
CITIZENS EXHIBIT DEEP WISDOM AS TO
WHAT CONSISTS OF WEALTH. $$$

Indian households have accumulated as much as 20,000 tonnes of gold, whose value
exceeds US$1.16 trillion, an historic
high. Conclude easily that the Indian
Govt efforts to curtail overseas purchases
of the shiftless asset (dead asset
that earns no yield) have failed badly.
This so-called dead asset is the world's
best, most secure, and strongest to
withstand the assault on paper wealth.
The officials in New Delhi wish to halt the fall in the Rupee currency
that such imports have caused. Their
gradual escalation of imposed import
duty was designed to reduce the Current
Account deficit, but they have
not yielded the desired results. The
Indian citizens stubbornly continue
to hoard wealth in gold. See the Financial
Express article (CLICK HERE).

The Indian citizens well understand the paper money game. Over decades, their
government has attempet to institute
various schemes to induce them to
turn in Gold for whatever scam program
conjured up, but the wise citizens
have refused, unlike their supposedly
more educated American (dupe) citizenry
counterparts. The rest of the world
is slowly learning as the currency
of last resort will become the currency
of first resort in a new global banking
system. Even the central banks are
back buying Gold for reserves, as
they face insolvency and annihilation.
The love of paper wealth and decades
of extreme reckless consumer stupidity
will earn the US citizens a residence in the Third
World. The Indian citizens understand
wealth, which is not founded on paper
securities or government promises
or banker contracts. India might have
enormous population problems, profound
sewage problems, and deep challenges
with poverty, but they are a century
more advanced than Americans in perception
of true wealth.

◄$$$ A FORCE MAJEURE WAS DECLARED AT THE C.M.E. MANHATTAN
GOLD DEPOSITORY, AS THE DEFAULT OF
PRECIOUS METALS MARKET APPROACHES.
THE DECEMBER GOLD DELIVERY IS IN JEOPARDY.
THE EVENT OCCURRED IN LATE NOVEMBER
WITH LITTLE PRESS COVERAGE. ANOTHER
MF-GLOBAL THEFT MIGHT BE REQUIRED
TO PREVENT A GOLD MARKET DEFAULT.
THE UPCOMING GOLD MARKET DEFAULT WILL
OCCUR, WITH MUCH CONFUSION AND DECEPTION,
LIKELY FROM A VACATED C.O.M.E.X. INVENTORY
AND HALTS TO PERMITTED DELIVERY. $$$

The scummy officials at the CME blamed the force majeure on Hurricane Sandy,
a bold but produced fiction. On Monday
November 26th, history was made. Rather
than an outright default, the market
directors declared a natural event
as cause for lack of inventory to
meet contractual demands. Regard the
hurricane as providing a designed
alibi of another kind. The shortage
of gold is acute, and pushing to the
surface in visible manner. Blame is
put on the hurricane, an absurd claim.
They will require a hurricane or natural
disaster every month, maybe another
MF-Global theft.

The CME declared a force majeure at the PAMP gold depository at Manfra, Tordella,
and Brookes Inc. They stated the depository
will not be able to deliver physical
gold due to operational limitations
from Hurricane Sandy, in their words.
Curiously, the same natural event
did not cause any limitations to the
HSBC and JPM gold depositories.
Some experts to the situation made
a further comment. Those holding MTB
warrants will be able to receive gold
from Brinks. The inconvenience and
extra cost associated with arranging
delivery from Brinks however will
likely dissuade many from standing
for December delivery, which is probably
the true motive for the announcement.
Expect Brinks to announce challenges
in working through the backlog or
orders.

Manfra has served as the PAMP supplier in the United
States. The explained
shortage due to the hurricane is very
thin, seen widely as a stupid excuse.
Note that it was the PAMP Swiss bars
from MTB that were recently found
counterfeited in Manhattan. The executives at the MTB reported the counterfeits to the
US Secret Service. Bigtime heat has
started to be felt in the Lower
Manhattan kitchen. See the Silver
Doctor article (CLICK HERE)
and the Silver Vigilante article (CLICK
HERE)
and the Fox Business New article (CLICK
HERE).
Precedent has been made, and coverage
of this bogus story has been widespread.
The future gold market default will
occur, but not without severe cloud
cover and deep deceptions. Be on the
lookout for another MF-Global type
event, with stolen private accounts
awaiting gold delivery. The motive
is there, the precedent set, the need
acute.

◄$$$ GREAT FUN RANT BY BILL HOLTER, WHO DISPUTED THE FORCE MAJEURE CLAIM
BY THE C.M.E. GROUP METALS SUPPLIER.
THEIR INVENTORY COULD FIT NEATLY INSIDE
A REGULAR SIZED CLOSET. NEITHER THE
THREE STOOGES WERE CALLED IN TO RETRIEVE
THE SUBMERGED GOLD BARS, NOR SCUBA
DIVERS. $$$

The colorful and on-target Bill Holter took some shots at the corruption behind
the CME Group for their force majeure.
Only the CME has suffered from the
effects of the Hurricane Sandy and
its high storm waters. Holter informs
that their 29,000 ounces of Gold and
33,000 ounces of Palladium vaulted
would fit in a large walk-in closet,
or the corner of a trailer home. This
is one ton of each metal, easily stacked
in a laundry room closet. With sophisticated
financial artistry, they do not deploy
a sump pump, standard issue in the
western suburbs of Boston, where the Jackass personally installed two in home basements,
complete with cement housing. Holter
wonders why professional scuba divers
were not dispatched to begin reclamation
of waterlogged gold bars. The Three
Stooges could handle the job in an
eight hour day, even if they crashed
the forklifts.

Meanwhile, on the same day of the force majeure announcement, nearly 7800 COMEX
Gold contracts were sold in less than
five minutes. The amount comes to
780,000 ounces, equal to 1% of the
entire annual global production of
the mining industry. The typical signature
waterfall contract sales repeat after
the price falls step by step, to ensure
the lowest possible price locked in
successively. This is only done with
corrupt moves marred by absent supply,
namely naked shorting. Holter concluded
by saying that anybody who trades
on the COMEX does so against the house,
against the corruption, against those
who can change the rules. Anybody
who trades on the COMEX should have
their heads examined.

◄$$$ WHOLESALE GOLD INVENTORIES ARE EVAPORATING. SOME DEALERS WILL PAY
OVER SPOT PRICE TO OBTAIN SUPPLY.
THE SHORTAGE IS BROAD, WHICH IS OFTEN
BLAMED ON GIGANTIC CHINESE CENTRAL
BANK ORDERS THAT HAVE DRAINED THE
MARKET INVENTORY IN SEPTEMBER AND
OCTOBER. THE MIGRATION FROM THE CORRUPT
G.L.D. FUND TO PRIVATE PENSION FUNDS
IS ON THE RISE. $$$

Host John Rubino of the Dollar Collapse website interviewed Tom Cloud, the gold
dealer from National Numismatic Associates.
They covered the sudden decline
in gold inventories. The major gold
wholesalers have not lately seen their
usual level of inventory. The
following are opinions and personal
accounts from Cloud. Of the seven
or eight major wholesalers that distribute
price sheets, almost every one is
having supply issues. Some coins and
bars are immediately available, but
most take between a few days and two
weeks to deliver, due to tight supply.
Many dealers will pay above spot for
Gold Eagles and other major coins
and bars.

A direct cause is difficult to assess, but some dealers
believe that the 58 tons that the
Chinese central bank purchased in
September was responsible for coin
shortages in the United States. Let it be known that the same central
bank purchased at least that much
volume in October. The shortages will
persist, perhaps worsen. Cloud mentioned
that if a big seller wishes to conduct
a transaction, the seller first contacts
Chinese authorities, the new normal.
Sales of gold bars to central banks
is a new phenomenon, and Natl Numismatic
Assoc just completed its first sale
to such a central bank. Other central
banks are buying gold also. Until
2011, central banks were selling gold.
However, in the last two years hardly
any central banks are selling and
many are buying. The effect of new
Basel III rules has become an important
factor. The dictatorial fortress in
Basel Switzerland
handed down an edict which counts
gold for its market value rather than
50% of the amount. So big banks buy
Gold to fend off their own death events.

Another factor is the wave of American small buyers is beginning to make an
impact. Despite the wholesaler, the
overall effect is tighter gold inventories.
The process is slow as the US public awakens to destroyed
sovereign bonds, insolvent fraud-ridden
banks, and fraudulent securities.
Therefore fraudulent money. The movement
out of the GLD exchange traded fund
has become a mild torrent. The corrupt
GLD fund continues to sell at a discount.
Its toxic subservient structure is
a story for the history books, allowing
for major banks to short the stock
and receive metal delivery on demand.
The GLD fund thus serves as a bullion
banker backstop of the most obscene
variety. More and more US citizens are setting up self-directed IRAs
that can hold bullion directly. Some
honest funds will permit delivery
of gold bars, provided the proper
tax forms are completed. Any new USGovt
law forcing conversion of such private
pension funds will undermine the movement
totally. See the Dollar Collapse article
(CLICK HERE).

## COIN DEMAND GOES BALLISTIC

◄$$$ US-BASED COIN SALES ARE ROBUST, VERY ROBUST. NEARLY THREE QUARTER
MILLION SILVER EAGLES AND 20,000 GOLD
EAGLES WERE SOLD IN THE FIRST THREE
BUSINESS DAYS OF DECEMBER. INVESTORS
REACT TO THE FISCAL CLIFF MORASS,
NEAR ZERO PERCENT BANK CERTIFICATES,
ULTRA-LOW SOVEREIGN BOND YIELDS, A
COSTLY SECOND TERM FOR OBAMA, AND
THE NEVERENDING CENTRAL BANK MONETARY
EXCESS. $$$

In early December, the USMint updated its sales totals. Both gold and silver
sales are extremely strong, with 728,000
silver eagles, and 19,500 oz of gold
eagles sold through the first three
business days of December. This
compares to 2.009 million silver eagles,
and 65,500 gold eagles sold for the
entire month of December 2011. This
month will be a very big month if
the pace continues. The drain on scarce
precious metal inventory supply is
enormous, precisely when the banks
have difficulty maintaining their
balancing act with account thefts,
naked futures contract shorting, raids
of GLD & SLV inventory, and brisk
shipments overnight to avoid a metal
default. See the Silver Doctor article
(CLICK HERE).
Given the extreme situation, expect
the pace to continue or even ramp
up further. The USGovt faces a debt
limit and mandatory spending cuts,
maybe another debt downgrade. The
Obama II Admin shows no signs of fiscal
aptitude or political skill, only
personality flair. The USFed is stuck
in QE to Infinity, the central bank
a den of heretics. The big banks are
broken and desperately playing shell
games in the gold market, fending
off court challenges for massive mortgage
contract fraud. The people react with
self-protection in a natural way.

Meanwhile, coin premiums are rising for months. Here is a spot check from Captain
Steve in the Midwest US. "The
$20 Liberties (containing less than
1 oz) graded MS-62 previously sold
for under spot (as reported on Kitco).
Example: $1700 spot netted seller
$1650. Now $1700 spot the seller nets
$1840, which is $140 over spot. Dealers
want slabbed twenties and will pay
$140 over. Premium has been rising
steadily past months." The
amount of premium reflects shortage.

◄$$$ HUGE US-MINT COIN SALES ARE REPORTED. AMERICAN EAGLE GOLD COIN SET
FOR BEST THREE MONTH PERIOD SINCE
2008, AND THE BEST NOVEMBER SINCE
1998. SILVER COIN SALES MORE THAN
DOUBLED YEAR-ON-YEAR IN NOVEMBER.
DEMAND WAS ATTRIBUTED TO THE USGOVT
FISCAL CRISIS, THE HEATED ELECTION,
AND SEARCH FOR SAFE HAVENS. THE PUBLIC
SEES A CENTRAL BANK OUT OF CONTROL
IN CURRENCY DEBASEMENT. $$$

November sales at the USMint were grand. The November sales figures are as follows:
136,500 ounces of Gold Eagles, 16,500
one-ounce 24K Gold Buffaloes, and
3,159,500 Silver Eagles. Because of
the huge number of ounces of gold
sold by the mint in November, especially
during this past week, the silver/gold
sales ratio dropped all the way down
to just over 20:1. It has been under
10:1 and even under 5:1 for months.
The Sprott folks see a 1:1 ratio often.
Thanks to Ed Steer of Casey Research
for the data.

Since late November, a sizeable boost was seen in bullion coin buying by investors
and speculators alike. Reports of
a huge influx of demand from new high
net worth individuals has come, people
buying a lot of gold, taking physical
possession. Such is the claim of Blanchard,
one of the largest US retail coin and bullion dealers. Investors
have bought more than triple the quantity
of American Eagles produced by the
USMint, compared to November of 2011.
The monthly sales marked the strongest
November since 1998, according to
the USMint website. The combination
of political breakdown, economic stagnation,
central bank inflation, and debt limits
all contribute to the desire by the
public to hedge against both inflation
and systemic disaster. See the Reuters
article (CLICK HERE).
The USGovt is mandated by law to produce
coins for public purchase, a process
they cannot legally halt. They can
delay but not halt. Thus the drain
on scarce metal supply.

◄$$$ SUDDENLY THE US-MINT HAS SHUT DOWN ALL SILVER EAGLE COIN PRODUCTION.
CONSIDER IT A FORCE MAJEURE IN RESPONSE
TO STAGGERING DEMAND AND DEPLETED
SUPPLY. $$$

The USMint has sold out of Silver Eagle bullion coins, supply to resume after
January 7th next year. All authorized
purchasers must contend with a three
week shutdown period. All such coins
have sold out and no additional coins
will be struck. As with other bullion
programs, the US Mint does not sell
Silver Eagle bullion coins directly
to the public, but distributes them
through a network of authorized purchasers.
The primary distributors purchase
the coins in bulk quantities at spot
price plus premium. The coins are
then resold to other bullion dealers,
coin dealers, and the public. Since
November the demand has been screaming
hot, with sales of American Gold and
Silver Eagles more than twice the
figures from the year ago. Adjustment
shifts to production schedules did
not prevent the total depletion in
sellout of the coins. Sales figures
published on the USMint website indicate
sales of 1,403,000 for 1-oz Silver
Eagle bullion coins for the month
of December. Year to date sales have
reached 33,510,500 in a staggering
display. See the Coin Update article
(CLICK HERE).
The Silver default is coming broadly,
before the more anticipated Gold default.

◄$$$ QUICK INVENTORY CHECK AT APMEX. IT IS LOW LOW LOW. $$$

For Gold, no 99.99% 1-kg bars, often called LBMA good bars. They have currently
23 in stock for 99.9 1-kg bars (not
LBMA good bars). They have currently
23 in stock for 99.99% 100-gm bars.
In entirety, calculate the gold inventory
held at APMEX to be less than 30 kilograms
across the board. At $56k/kg value,
it comes to approximately $1.2 million
in inventory. Not much. For Silver,
they have a total of 334 in stock
for 100-oz bars. Of these, 142 are
from Johnson Matthey. At $3500/100oz
value, it comes to approximately $1.17
million. Not much. Expect news stories
about orders not met, vacant inventory,
all in time.

◄$$$ ALL US-BASED AND CANADA-BASED SMALL COINS WILL BE PHASED OUT IN JANUARY
2013. THE 1-CENT AND 5-CENTS PIECES
WILL GO AWAY, SINCE INFLATION KILLED
THEM. THEIR COST OF PRODUCTION IS
MULTIPLES HIGHER THAN THEIR VALUE,
WHICH EXPOSES THE INFLATION. MERCHANTS
WILL ROUND TRANSACTIONS TO THE NEAREST
10 CENTS. $$$

In the United States and
Canada, the smallest coins will go away in 2013,
victims of inflation. The cost of
producing the coins is much higher
than face value. The fast conclusion
is that money is fake and inflation
is much worse than cited. Historically,
coins have revealed the fraud of money
and the manifested central bank ruin
of money since the Roman
Empire. The Canadian Govt will phase
out their penny (1-cent piece). In
lockstep, the USGovt announced both
the penny and nickel (5-cent piece)
will be phased out. Treasury Secretary
Geithner announced that the USMint
will remove the penny and nickel coins
from circulation, the process to begin
in early January 2013. The shocker
is costs. Due to the rising costs
of zinc and production related expenses,
the USMint spends 4.8 cents to make
a penny. The cost of copper and nickel
have inflated the cost to create a
nickel coin to 16.2 cents. The
ratio comes to 3.24 over face. They
could not reduce the size of each
coin by 5-fold without causing an
uproar of laughter and mockery. In
2011, the USMint made over 4.9 billion
pennies. So at a cost of $118 million,
it produced what circulates as only
$49 million in metal currency. Minting
the nickel coin also represents a
significant loss in revenue. By comparison,
the dime (which costs 9.2 cents to
mint) and the quarter (21.31 cents)
are economically more feasible, and
will continue in circulation through
2013. These slugs contain trivial
amounts of silver. Wood might be more
appropriate for nickels.

Once the phase out of pennies and nickels begins, merchants must adjust prices
by rounding all transactions to the
nearest 10-cent increment. Credit
card, debit card, and check payments
would also be subject to the rounding
rule. The rounding procedure will
not result in higher costs for purchases
or losses for merchants. All those
who saved numismatic coins before
the great coin sham four decades ago
will be richly rewarded, including
a Jackass family member. Pennies and
nickels will be redeemed in at financial
institutions, sent to the USMint,
where they will be recycled in a highly
profitable little project. See the
Skew News article (CLICK HERE).
My view is that the phase-out is cost
driven, not with motive to expose
criminal hoards. That event comes
later in USDollar bill transitions.

An Aussie from Down Under pitched in a comment. "In Australia our smallest coin denomination is five
cents. We lost the one and two cent
coins many years ago, and the economy
did not collapse. However, I do believe
once coins or paper currency is removed,
it will help transition to greater
control over the individuals wealth.
When our currency changed from pounds
and shillings and pence in 1966, to
receive the new currency, all hidden
wealth was exposed."

##
MINING STOCKS DEPRESSED

◄$$$ MINING STOCKS HAVE FALLEN SEVERELY IN COMPARISON TO THE PRECIOUS
METALS PRICE BENCHMARK IN THE LAST
YEAR. THE PAPER PROBLEM IS GROWING
WORSE. METAL (BARS & COINS) WILL
FARE MUCH BETTER THAN PAPER SECURITIES
OF ANY KIND, WHETHER STOCKS OR BONDS
OR MORTGAGES. THE POOR PERFORMANCE
OF MINING STOCKS IS GAINING ATTENTION.
$$$

The Jackass urged subscribers and investors to exit mining stocks in early 2008.
In 2011 and 2012 the outcome is clear.
The mining stocks continue to erode
against the precious metals price,
the slide versus the benchmark Gold
price ongoing still. Trader Dan
Norcini is a fine analyst. He displays
the ratio of the HUI and XAU indexes
versus the Gold price to make the
point that the stocks are doing very
badly, as expected within the Hat
Trick Letter. To be clear, the QE
program of extreme volume in USFed
bond purchase via direct monetization
is the manifestation of hyper monetary
inflation. Since 2010, the QE has
bolstered the Gold price, but not
the mining stocks. The USGovt stock
props have been active, but they selectively
and secretly choose the S&P500
mainstream stocks to support since
approved, excluding the mining stocks.
This is further proof that the sector
is not a good investment in general,
although the astute few investors
can continue to do well with certain
individual stocks. Metal in the form
of bars and coins is far superior.
The mining shares will continue to
erode further against Gold as the
paper securities plague goes on, festers
further, and ravages wealth.

Trader Dan remains hopeful, but my suspicion is that hope should yield to stark
realization of a deep infection in
paper securities. He urges the CEO's
of mining companies to listen to the
message of the market, then to make
the necessary changes to their organizations.
He suggests they cut expenses and
offer investors dividends. My firm
belief is that neither will work.
Expenses are rising from material
costs, labor costs, and defense against
jurisdiction threats. Dividends cannot
be provided easily, since funds are
in short supply. That is precisely
why the mining firms regularly put
investors through the other inflation
ringer. They issue more stock in addition
to the executive bonus outlays. Dilution
of shares is a ravaging effect that
the Jackass often points out in criticism
of the mining stocks. Labor strikes
are the newest threat, as the cost
of living has risen sharply for the
working class. Each nation differs
in taxes and fees for various items
like environment impact. The United States imposes taxes from the Environmental
Protection Agency, with further fees.

Trader Dan acknowledges that relative to Gold, some of these shares are as cheap
as they have ever been. That has NEVER
been a good argument to invest. So
when they are even cheaper, the proof
will be even more clear that metal
(bars, coins) are superior investments,
so goes the broken logic. Dan concludes,
"Checking in with the HUI,
some of the shares that comprise that
index are as cheap, relative to Gold
itself, as they have been in ELEVEN
years." Ok, so exit them
before they are the cheapest in 20
years. See the Trader Dan article
(CLICK HERE).
The problem is deeper than Norcini
describes. Noricini is a fine gentleman,
but he seems committed to the shares
come hell or high water. The high
water has been seen in the NorthEast.
Next comes the hell. Distrust of paper
wealth is the root, as the paper based
platforms of wealth are being destroyed
systematically. The Jackass saw this
in 2008 before the Lehman
firm collapse. The world makes a gradual
important Paradigm Shift to a gold-based
trade settlement system to displace
the USDollar from its corrupted perch
that permits hegemony. Dilution of
mining shares is a constant inflation
effect. Costs are rising to be sure,
but so is confiscation risk and labor
strike risk.

◄$$$ THE TORONTO STOCK EXCHANGE IS SLOWLY FADING INTO THE PAPER MACHE SUNSET.
THEY MIGHT AVOID A DECLINE IN THE
MAIN INDEX BY ADDING MORE STOCKS IN
VOLUME TO COMPENSATE FOR THE SEVERE
PRICE DECLINES IN SHARES. $$$

The StockWatch website offered an intriguing quote recently. They wrote, "Earlier
this month the TMX Group was touting
the 26 new issuers it welcomed in
October. Ten were from the mining
sector and of those 10, seven listed
on the TSX-V. The TSX-V now has 2436
companies listed, many of which are
in the mining sector. What the exchange
has not been touting, however, are
the low prices of its battered listings.
As of today, 1266 TSX-V-listed companies,
or 51.9%, closed at 10 cents or under,
while 743 companies, or 30.5%, closed
at five cents or under." This
is a horrendous admission of failure
stock security performance, hardly
a feature to attract investors. It
is an argument to liquidate. The Jackass
will list some Junior mining stocks
aside my favorite Silver Wheaton (uniquely
different), since clients wish to
know my best picks. Most fish caught
in the sewer tributaries are not worth
eating. See the Stock Watch article
(CLICK HERE).

##
USECONOMY UNDER DEATH SENTENCE

◄$$$ THE USECONOMY IS DIMINISHING AS A PLAYER IN THE GLOBAL ECONOMY. ITS
SHARE OF THE GLOBAL ECONOMY HAS FALLEN
BY 10% IN THE LAST TEN YEARS, WHEN
THE NATION BEGAN TO BEHAVE IN AN ABERRANT
MANNER. SUSPICION OF THREATS HAS DISCOURAGED
FOREIGN RELATIONS IN BROAD TERMS.
AMERICANS ARE DELUSIONAL ABOUT ITS
CONSTANT PRIMARY IMPORTANCE. ISOLATION
IS TAKE
PLACE RAPIDLY. THE NATION HAS BECOME
JUST ANOTHER BIG MARKET, NOT A LEADER.
FURTHER ISOLATION COMES WITH GREAT
RISK. $$$

First comes isolation of the USEconomy, then comes the rejection of the USDollar
which will dismiss it into the Third
World. The bust of the tech-telecom
asset bubble in 2000 marked a seminal
event. Few observers appear to have
noticed that afterwards, when the
recovery took place, it was very aberrant
in makeup. The 911 events soon followed.
The United States as a nation has begun to follow
a dangerous path of seeming paranoia
and pre-occupation with foreign threats.
The great majority are imaginary,
as the great threat is internal. The
effect is seen in the graph of US
Gross Domestic Product, as it has
diminished in the global perspective.
The rest of the world did not abandon
the US, but pulled back. As the USEconomy shrinks
further as a global player, it risks
sliding into the Third World as soon as its currency is no longer considered acceptable
to pay for trade shipments, better
called vast imports. That is the next
major event.

◄$$$ CHICAGO NATIONAL DIFFUSION INDEX IS FLASHING LOUD WARNING SIGNALS.
IT IS THE MOST OMINOUS ECONOMIC INDICATOR
FROM THE USFED. ITS ACCURACY IS WELL
UNDERSTOOD, THEREFORE IGNORED. $$$

While the USCongress and White House argue over the budget and debt limit, the
USEconomy slides with tremendous momentum.
The trains and trucks have already
gone over the cliff, as the impact
awaits. The USFed has continually
warned that the central bank cannot
alone pull the nation out of the morass.
The combination of bank sector fraud,
government fiscal deficits, endless
war, and wretched discouraging tax
policy has put the USEconomy on a
path with such momentum that no single
decision to come will rescue from
the impact crater below. The Chicago Fed National Activity Index (CFNAI) flashes
a loud warning of decline. It
has been featured in the recent past.
This is no simplistic indicator assembled
in haphazard manner. It is an index
comprised of 85 established economic
indicators and trends drawn from all
areas of the economy. It was first
compiled in 1967 and has a remarkable
record for identifying early when
the economy has entered a recession.
It is almost never discussed in the
financial media or by Wall Street
firms, since it is accurate, and since
they promote an opposing point of
view for their corrupt agenda.

The monthly reading of the index was in negative territory for five consecutive
months before improving to the flat-line
at zero in September. Unfortunately,
that improvement lasted only one month.
The report in early December showed
a sizable drop to minus 0.56 in October.
The critically important 3-month moving
average is on course for eight consecutive
negative monthly readings. Just
a slight additional decline to the
minus 0.70 level, and the USFed will
see its own internal trigger pulled,
to announce a recession has begun
with high likelihood. The most
recent occasions with red signals
were flashed in 2001 and 2008. Risk
is rising as the squabble in WashingtonDC
continues in a never ending cycle
of futility.

◄$$$ CAPITAL SPENDING IS FALLING DANGEROUSLY. THE USECONOMIC RECESSION
IS RECEIVING A POWERFUL DOSE OF HEMLOCK
FROM THE USFED IN THE FORM OF Z.I.R.P.
& Q.E. THAT KILLS CAPITAL. THE
RETIREMENT AND LIQUIDATION OF EXISTING
CAPITAL EQUIPMENT AND INHIBITED OUTLAYS
OF NEW CAPITAL EQUIPMENT ARE DEVASTATING
IN A SLOW CORROSION PROCESS. THE ULTRA-LOW
INTEREST RATES DO NOT LEAD TO BUSINESS
INVESTMENT IN THIS CLIMATE. CENTRAL
BANK POLICY CANNOT LIFT INVESTMENT
LEVELS EVEN TO THE DOWNTREND LINE.
$$$

Awareness is rising slowly of reduced capital spending and capital formation
in the developed industrialized world.
Tax policy has had a severe dampening
role as socialist policies take root
at a time when the Western economies
adjust to a decade of forfeited industry
to China. The United
States and Western
Europe have followed a disastrous
path since China awakened. Legitimate income sources have
largely been replaced by speculation
and financial sector debt securities
paper shuffling, often called sophisticated
clean industry. It is neither, since
the sophistication is mere cover from
leveraged recklessness in supposed
risk offload. The clean aspect is
a defiant lie, since toxic paper is
a closer cousin to acid than fresh
water. The US and West has truly
lost its comprehension of, dedication
to, and implementation of capital
formation as the concept of productivity
has turned into a deceptive tool to
lavish self-admiration. The United
States has lost
its sense of capitalism, and no longer
comprehends how to build businesses
or to create jobs. Only the good economists
recognize the lost art and heresy
from the USFed itself. The majority
are Wall Street harlots, equity fund
pimps, or university shamans, not
worthy of any respect.

The current trend in the US board rooms has been to
shun new capacity, to protect market
share, while the entire pie (national
economy) shrinks in size. The pattern
seen has been to cut capacity, to
reduce costs, to cut the work force,
and to show greater profit, while
the entire pie (national economy)
shrinks in size. Thus the micro
successes lead to macro failure. The
nasty winds of government taxes and
burdensome regulations have resulted
in seeking more favorable trade winds
in other lands, moving headquarters
after already having moved manufacturing
operations, while the entire pie
(national economy) shrinks in size.
In past decades, US businesses responded
to hostile labor unions. Now they
respond to hostile economic conditions,
hostile cost structure, and hostile
socialist government hands. Companies
invest more in their own stock buyback
programs than in business equipment
and machinery. In 2012, the stock
buybacks are at obscene levels, around
$500 billion. A tipping point
of stock speculation over business
investment was reached back in 2007
and 2008, reported in the Hat Trick
Letter. The trend continues. If the
USGovt and its Working Group for Financial
Markets are not buying the US
stock market, then the US
corporate board rooms are. The small
investor is largely gone. The flash
trade programs continue. Traditional
types of volume are drying up, a horrible
symptom.

Capital spending in the United States is falling sharply.
The staff under Jeremy Grantham put
together the above graph. It is disturbing,
and confirms the Jackass view that
since 2006, not only the US
but also Western Europe have been on a severe downward path with no hint of recovery,
only collapse. The staff points out
a 25% correlation between savings
and investment with the economic (GDP)
growth. The circled area highlights
an abnormally depressed level of capital
spending, which augurs for a very
poor future marred by deepening crippling
recession. Notice how the QE and QE2
and Operation Twist and QE3 have done
nothing to restore the capital spending.
It remains below the downtrend line.
The current reduced investment level
appears to be 4% below the decline
in the growth trend. The USFed monetary
policy addresses none of the national
ills, led by insolvency, fraud, and
over-taxation. See the Market Oracle
article by John Mauldin (CLICK HERE). He must wish
he could eat his words, too often
stated over the last decade, even
monotonously stated since so often
and so wrong, about muddling through.
Such facades of optimism have no place
in competent analysis. The US did not muddle through,
but rather has suffered a collapse
as forecasted in the Hat Trick Letter,
which never bends to conventional
optimistic mainstream vapid analysis.

◄$$$ A QUICK PASS OVER THE FRAUDULENT NON-FARM JOBS
REPORT. THE JOBLESS RATE REMAINS AT
DEPRESSION LEVELS. DOWNWARD REVISIONS
IN SEPTEMBER AND OCTOBER WERE VERY
EXPECTED, AS ROSY MONTHS WERE PAINTED
DURING THE CAMPAIGN. WITH THE RE-ELECTION
COMPLETE, REALITY DICTATES THE FACADE
REMOVED. $$$

Again, the deception deserves a splash of reality in dispute. The monthly exercise
must be done to dismiss the economic
drivel with spin from the Non-Farm
Jobs report. It will not be given
much time, out of respect for honesty
and integrity. The Novermber Jobs
added supposedly 146 thousand new
jobs, in their fictional world led
by deception and chicanery in full
view. Theirs is a shell game without
the shells. The deeply biased unemployment
rate fell to 7.7%, as hundreds of
thousands fell off the jobless insurance
bus, no longer counted. The proof
in the pudding again was the decline
in the participation rate, down to
63.6% in a nation of discouraged workers.
The pre-election deception was blatant,
lifting September and October, only
to reduce them in revisions in November.
The two pre-election months were
revised down by 49 thousand jobs.
The reality is presented in the upper
graph, as the accurate depiction lies
in a 22.9% jobless rate. It has not
come down from depression levels.
Great work as always by the Shadow
Govt Statistics folks. The labor market
reporting by the USGovt continues
in a series of politicized disgusting
reports that bring travesty to USEconomic
reporting, and shame to the statistical
analyst trade.

◄$$$ FED-EX IS TYPICAL OF AMERICAN BUSINESSES, AS THEY FEEL THE PINCH
TO PROFITS. REGARD THEM AS A BELLWETHER
INDICATOR FOR THE USECONOMY. FED-EX
IS RAISING PRICES DUE TO HIGHER COSTS.
THEY PLAN TO TRIM THE FIRM AND TO
IMPROVE PROFITABILITY. $$$

The message is very clear, a harsh indicator of the USEconomy. As Fed-Ex goes,
so goes the national economy, simply
put. The shipment firm that covers
the nation completely is as good an
indicator for the nationwide economy
as payroll tax receipts. Both are
flashing lousy. The shipping firm
is feeling the ZIRP & QE shock
more than most. They have recently
announced another hike in delivery
rates up 5%, as well as offering current
employees a volunteer buyout. The
company claims it needs to cut expenses
of $1.7 billion in three years. Job
cuts, along with fleet upgrades and
efficiency improvements led by certain
technology installations, are part
of an initiative to improve profitability
by $1.7 billion per year by 2016.

Employees will be notified by mid-February on eligibility to accept the buyout
offer. The buyout packages offer up
to two years of base pay plus $25,000
in assistance on health care expenses.
The company expects a big response
from workers. This is not a recovery
statement, but a defensive reaction
to harsh recession conditions. An
economist in Las
Vegas might summarize that Fed-Ex
is being hammered with the trifecta
of the USFed monetary policy, the
disastrous wrecking ball. They are
hit by 1) Higher energy costs and
increased expenses, 2) Business clients
shrinking, and 3) Fed-Ex revenue shrinking
with no yield on cash reserves. See
the Commerical Appeal article (CLICK
HERE).
No evidence of national economic recovery
here.

◄$$$ DATA STORAGE COSTS ARE RISING VERY FAST. THEY ARE UP 50% FROM FIVE
YEARS AGO, AND ARE SET TO RISE ANOTHER
25% NEXT YEAR. SINCE A SMALL PART
OF THE OVERALL BUSINESS, THE ATTENTION
HAS NOT BEEN GIVEN. $$$

An interview of AML Technology cited that data storage costs are rising fast.
Hardware costs have risen from 20%
of the total level five years ago
toward a 50% current pace. The blame
is put on absent technology growth
for hard disk storage. Advancements
have not kept pace with the exponentially
growing demand to hold data from sales,
inventory, supply lines, staff profiles,
customer records, and more. The increased
usage of cloud storage, sometimes
called virtual storage, is one possible
solution in the near future. The costs
are expected to rise. Gartner Research
forecasts the costs of managing the
data storage systems will rise about
25% next year. In addition, the
energy costs of running businesses,
including the data farm, are also
rising. For years, storage has been
assumed to be cheap forever. Many
firms have gone out of business.

## ECONOMIC IMPEDIMENTS & SCARS

◄$$$ THE SOCIALIST DRAG ON THE USECONOMY WORSENS, AS 73% OF NEW JOBS CREATED
IN THE LAST 5 MONTHS ARE IN GOVERNMENT.
THE BUSINESS SECTOR HAS BEEN BRACING
FOR THE SHOCK OF OBAMA-CARE. THE USGOVT
SECTOR HAS BEEN BUILDING UP THE SOCIALIST
SYSTEM NETWORK OF BUREAUCRACY, OVERHEAD,
AND IMPEDIMENTS TO EFFICIENCY AT GREAT
COST. THEIR FRINGE BENEFIT COVERAGE
IS LOCKED IN, COST AND ALL. THE SOCIALIST
EFFECT MATCHES THE POLICE STATE EFFECT,
MUCH GREATER COSTS WITH NO TANGIBLE
CONTRIBUTIONS. $$$

CNS News has discovered that a whopping 73% of the new
jobs created over the past five months
within the USEconomy are government
jobs. The majority of new job creation therefore does not contribute much to the
economic vibrancy. What is not service
is overhead and bureaucracy. The real
productive USEconomy is being drained,
or better described as operating with
a great burden shared nationwide.
The socialist system acts like a gigantic
yoke to bear, spreading the misery,
adding to the weight being pulled
by the two-legged farm animals that
voted for the disastrous path. France
and the United
States will be
visible examples of crushing costs
and inefficiency as they collapse
in full view.

The Bureau of Labor Statistics provides the gorey details. Between June and
November 2012, the total population
employed within the United
States grew from
142,415,000 to 143,262,000. The figures
include those employed by federal,
state, and local governments. Of the
overall increase of 847,000 in the
six months since June, the government
sector was responsible for an increase
of 621,000 to 20,559,000. These 621,000
new government jobs created in the
last five months equal 73.3% of the
847,000 new jobs created overall.
No breakdown for the federal portion
is available. See the CNS News article
(CLICK HERE).
Keep in mind that many small businesses
eluded the official count, but the
sector is under siege and not expanding.
A sneid colleague added a scary comment.
He wrote, "I am hearing about
extensive hiring for FEMA camps, which
needs officers. Also broad hiring
in Homeland Security with urban assault
forces, since the 15 thousand urban
assault vehicles will require drivers."
My reply to him directed attention
to greater hiring in the private sector
for bankruptcy and foreclosure counseling,
and foreclosed home lot cleaning crews,
all new growth areas. It is all cynical
talk, but perhaps containing some
reality.

◄$$$ FOOD PRICES TO ACT AS BARRIER TO ECONOMIC GROWTH NEXT YEAR. THE COMBINATION
OF NEW OBAMA-CARE COSTS AND HIGHER
FOOD COSTS WILL BE VERY STRONG WITH
BIG NEGATIVE OVERALL EFFECT. THE MIDWEST
DROUGHT IN THE UNITED STATES HAS NOT
GONE AWAY. IT MORPHED INTO A WINTER
DROUGHT. THE MISSISSIPPI WATERWAY EFFECTS WILL BE AGGRAVATED, AS SHIPPING IS CURTAILED.
THE SUPPLY CHAIN IS SERIOUSLY ALTERED.
FOOD COSTS WILL RISE, BLAMED ON THE
DROUGHT AND RIVER. IN REALITY, THE
USFED MONETARY POLICIES ARE ALSO A
FACTOR IN HIGHER FOOD PRICES. WORSE,
THE LOWER FARM OUTPUT IS A GLOBAL
PHENOMENON. THE FOOD PRICE EFFECT
IS GLOBAL. MIDEAST OIL PRODUCERS MIGHT WISH FOR HIGHER OIL PRICES TO MANAGE DOMESTIC
FOOD PROGRAMS AND PRICE SUBSIDIES
BEFORE MORE SOCIAL ERUPTIONS. $$$

The Jackass summary points above pertain to the United
States. However,
the drought affected the entire Northern
Hemisphere. The data is compelling
for a global effect. If the rest
of the world cannot produce adequately
in grains, then the reliance upon
the US supply will be greater. The US produces over half the
world grain. The US supply line is interrupted. Big global food
price rises will come this year, evident
in the next few months. The United
Nations lowered its estimate of world
grain stocks for the season ending
in 2013 by 5% to 495 million tonnes,
also its estimate of production lower
by 2.8% to 2.282 million tonnes. According
to the USDept Agriculture, grain stocks
globally are the lowest since 1998
at just 4.32% of demand usage. In
the United States, the corn inventory
is expected to decline to 5.63% of
demand, the lowest since 1996 when
it fell to 4.98% and the lowest ever
recorded. Records began in 1960 for
Bloomberg data. By comparison, the
average for corn since 1960 has been
17.92%, but it has been 11.1% since
1990.

The leading Iowa State University agricultural scientist Elwynn Taylor offered details on
soil effects. He expects lower corn
output in 2013 for the fourth year
in a row, although not as bad as last
year. Subsoil moisture in the big
crop states is already rated more
than 90% short to very short, a condition
not expected to rapidly improve. He
concluded some serious root development
damage in the soil. The crops
are desperate, as the shortage of
rain resulted in corn and soybean
roots to extend over eight feet down.
The plants tried to obtain soil moisture.
More rain will be required to replenish
the root systems, which is not happening.
The rivers will not be in a position
to aid irrigation efforts in compensation.
The impact is being felt in livestock
inventory. The US
cattle stocks are the lowest in 60
years. The meat market is effectively
borrowing from the future. Higher
beef prices are a guaranteed event
later on.

Rival supplies from South America and the Black Sea (Eastern
Europe) region are exhausted. Brazil
has its own shortage, the factor in
a 17% price rise for corn over the
previous month alone. The Argentinian
exporters have stopped offering corn
for sale until at least March or April.
Corn prices in the Ukraine have surged to levels equivalent to US
prices, but with lower quality corn
to offer the market. The nations of
Japan, Mexico,
and Taiwan
wll turn to the US for shipments,
no longer able to have orders met
by Brazilian suppliers.

Even Russia saw its harvest fall by one third due to
hot dry weather. They are the #3 wheat
producer globally. Its exportable
surplus has been exhausted. The Russian
farmer union has asked for a formal
relaxation of the rules, in order
to permit more imported wheat and
rye from Kazakhstan and Germany. A shortage is anticipated by the spring.
Wheat yields are down in Australia, and so is its average protein content.
Their harvest fell in volume, thus
reducing the wheat inventory to 11.5%
of demand usage, down from the normal
range of 13.5% to 14%. Soil damage
has taken place in Australia,
as the two La Nina events brought
rain that washed away the valuable
nitrogen in the soil. It must be replenished
with fertilizer, adding to the cost
of production. The situation in the
United
States was not
much better with the winter wheat
crop, as many crop ratings are well
below normal in Kansas
and Nebraska, the wheat belt.

Morgan Stanley is the leading Wall Street firm involved with commodity contract
trading for a variety of items, most
notably energy and grains. The firm
expects corn to be the best performing
commodity in the first half of 2013,
with an forecasted price rise of 34%,
as record low supply prompts nasty
competition between food and ethanol.
The current food price index maintained
by the United Nations is actually
below all-time highs set in the recent
past. But the developments in 2013
assure a new record level to be reached.
The UN food prices are 6.9% below
April 2008 highs in cereal, 3.5% below
November 2011 highs in meat, while
the overall food index is 11.3% lower
than their February 2011 record level.
More to the point is trend, and the
grain prices are above the winter
prices a year ago at this time. The
political impact is clear. With grain
prices 9.4% higher than the previous
December record set in 2010, danger
looms. The launching pad for MidEast
instability in Egypt
and elsewhere was built by the late
2010 jump in food prices. That is
when it began, the infamous Arab Spring.
Ironically, MidEast
oil producers will require a still
higher oil price in order to accommodate
food subsidy programs that address
the increased social demands and related
political strains.

Two important truths will be manifested in early 2013:

1) Higher food prices will worsen economic and social instability, a survival
issue.

Watch for a renewal of Arab Spring from global supply
problems aggravated by the drought
in the global breadbasket, the US
plain states. The financial crisis
has not provided an adequate environment
in which to permit a catch-up in supply. The imbalance is growing worse. Neither price rise nor demand destruction can
avoid an even deeper imbalance and
crisis later on. Expect industrial
demand to be priced out, like for
food factories and ethanol centers.
Substitutes will be sought, probably
in vain. History shows that food price
hikes are at the root cause of most
periods of political upheaval and
change agents politically. The unavoidable
economic effect is that as more household
funds are spent in the USEconomy for
food, less will be spent on other
consumption, less on business investment,
less for everything. The food crisis
will be all consuming in attention,
focus, with rising alarm. It will
be an important factor in the systemic
failure of the nation. Several
nations might go down the same ugly
tragic path.

◄$$$ OBAMA-CARE PRE-EXISTING CONDITION FEE TO COST COMPANIES $63 PER PERSON
AND HIT EMPLOYERS WITH $MILLIONS MORE
IN COSTS. THE TRUE COST WILL BE BETTER
KNOWN BY THE PUBLIC OVER TIME. EXPECT
OBSTACLES FOR HEALTH CARE BUT MORE
MANAGED DEATH. $$$

The ObamaCare health plan is loaded with costs for all employers, the worst
felt by the small businesses. But
additional hidden costs have come
to light. Expect the hidden cost imposed
at $63 per person to be passed onto
the employee, for those nagging pre-existing
conditions. The charge is buried in
a recent regulations and the fine
print documentation. The pre-existing
medical condition cost feature will
cost tens of $millions for the largest
companies. It is a sleeper issue
with significant financial consequences
and nothing in return for company
output. The drag on the economy is
clear. Based upon estimates, the
employer and individual health plans
covering an estimated 190 million
Americans could owe the per-person
fee. The Obama Admin calls it
a temporary assessment levied for
three years starting in 2014, designed
to raise $25 billion. It starts at
$63 and then declines. Most of the
money will go into a fund administered
by the USDept Health & Human Services,
used to cushion health insurance companies
from the initial costs of covering
uninsured people with medical problems.
To be sure, a smaller amount of $5
billion will go directly to the USTreasury
till, designed to offset the cost
hit for early retirees.

The $25 billion fee is part of a bigger package of taxes
and fees to finance the entire health
care program. The total cost comes
to $700 billion over 10 years. Expect a severe damper imposed on
the entire USEconomy that makes the
entrenched recession must worse. In
a parallel tax hike, higher Medicare
taxes will go into effect this January
on individuals making more than $200,000
per year or couples making more than
$250,000. People above those threshold
amounts also face an additional 3.8%
tax on their investment income. But
the insurance fee had been overlooked
as employers focused on other baseline
costs in the law, including fines
for medium and large firms that fail
to provide coverage. See the Huffington
Post article (CLICK HERE).
Do not expect better health care,
only wider coverage. Expect instead
roadblocks to receiving health care
in the form of a sprawling meddlesome
bureaucracy. Expect also more obstacles
designed to ensure that many people
die from denied treatment. This is
a death care program in many ways,
but honestly much treatment is useless
and wasteful for the seriously sick,
where hospice makes more sense.

◄$$$ THE WORKING CLASS SOON WILL DEMONSTRATE FRUSTRATION WITH THE HIGHER
COST OF LIVING. THE PHENOMENON COULD
SPREAD LIKE WILDFIRE. THE USFED MONETARY
POLICY HAS LIFTED THE ENTIRE COST
STRUCTURE. THE PRESSURE POINT IS THE
WORKING CLASS. WATCH THE EFFECT ON
SERVICES GENERALLY. THE SHOPS WILL
RAISE PRICES OR SHUT DOWN. $$$

The fast rising cost of living will soon be pervasive
and noticed everywhere. Labor unrest
from deep frustration is going to
spread like wildfire. Curiously, it is already responsible for gold mine project strikes around the
world. Expect the frustration to be
noticed and observed and manifested
in the USEconomy very soon. The next
chapter is for labor unrest to lead
to civil unrest then grand disorder.
In my view, the trigger for much
disorder to come soon will be from
the working class being unable to
manage their rising costs, already
under strain. The service sector
relies heavily upon this group to
arrive at work and to provide service.
To date, the effects of the highly
destructive USFed monetary policy
of ZIRP & QE have undergone little
notice. The capital destruction and
systemic failure forces are well hidden
within the cost structure. Rising
costs are the result, simply stated.
The pressure points are most acute
on the working class, since the poorest.
The effect will will be broadly felt
in the labor market, since they cannot
afford the rising cost of living.
They are the most vulnerable. Already,
fast food workers have gone on strike
in New
York City, where the costs are greatest.
Watch for some feedback reactions
like much higher prices and some burger
joints shut down. See the PressTV
article (CLICK HERE).
An observer from England
pitched in with a comment, since the
effect is similar in London. He wrote, "The tone is slowly changing among the lower
middle class, where a sense of desperation
will lead to social unrest. It is
a natural progression of events."

##
HOUSING FORECLOSURES & LITIGATION

◄$$$ THE HOME FORECLOSURE PIPELINE REMAINS MASSIVE WITH OVER FIVE MILLION
HOMES READY TO BE SEIZED. THE SEIZURE
RATE HAS COME DOWN FROM THE PEAK,
BUT THE INVENTORY IS ENORMOUS AND
TRAGIC. THE BLOAT ASSURES NO PRICE
RECOVERY IN THE FORESEEABLE FUTURE.
THE NATION IS FAST MOVING TOWARD A
RENTAL HOUSING MARKET FOR HALF THE
POPULATION. $$$

Over 5.3 million mortgages lie in the foreclosure pipeline. Stable prices or
rising home values make it easier
for banks to unload these properties
through various sales mechanisms.
Bear in mind that the banks themselves
produce the artificial market that
gives the appearance of stable prices,
by conducting short sales in private,
where the home price is not recorded
in national statistics. No recovery
is occurring. In that respect,
it is the same deception as discouraged
workers not counted as unemployed
in the labor market. Think discouraged
home falling off the market. The US
housing market is not recovering.
A ripe 100 thousand homes are being
put back into the foreclosure pipeline
each month, a situation that remains
concerning. Back in 2008, the
Jackass forecasted two more years
of housing market declines. In 2009,
the forecast was repeated. In 2010
and 2011 and 2012 the same forecast
has been repeated. The conclusion
is more simply stated: permanent US housing market decline.
This is a truly wrecked market. Ironically,
the home is not a hard asset. It is
rather an abused asset attached to
corrupted financial instruments called
mortgages, which are thrust into the
Wall Street cauldron of contemptible
corruption. The last year has seen
no notable improvement in either foreclosure
starts or completions. No wind down
is evident. See the Dr Housing Bubble
article (CLICK HERE)
and his excellent chart. The banks
are becoming the primary landlord,
as the collectivism sweeps the nation,
eradicates capitalism, and installs
marxism with a fascist slap in the
face.

◄$$$ MORE HOME EQUITY LINE OF CREDIT EXTENSION OF CREDIT HAS SURGED. THE
PROBLEM IS REPEATING IN PURE AMERICAN
ABUSIVE STYLE. THE SUBPRIME CANCER
MERELY METASTASIZED IN A DIFFERENT
LOCATION. THE NATION CANNOT BE CURED
WITHOUT A COMPLETE LIQUIDATION. A
PARALLEL IS SEEN IN CORPORATE DEBT
ABUSE ALSO, WHICH IS USED IN STOCK
SHARE BUYBACKS. $$$

Bloomberg reported that HELOC (home equity lines of credit)
will result in mortgage equity withdrawals
to rise 30% this year to $79.6 billion.
Since that marks the highest since
2008, it is safe to conclude the mortgage
cancer has returned in a more localized
metastasis. The other cancer ground
is the FHA with its same old sub-5%
down payment, and returned high default
rates, recently reported in the Hat
Trick Letter. Nothing seems to change
in the United States housing market. The deeply aberrant
behavior just shifts locations or
offices as underwriter. Moodys forecasts
that the HELOC equity withdrawals
will rise by 31% next year to $104
billion. Their stated justification
is actually an absurd platform that
national housing stock value is rising.
If they believe unemployment is falling,
then they probably accept rising home
value too. Bring back the second half
recovery, the green shoots, and the
exit strategy too. The perceived positive
effect is that consumers are spending
again, burning their furniture again,
buying things they do not need again,
in a celebration of consumerism all
over again. They will flame out like
moths chasing a light source, since
they are borrowing to sustain their
consumption. Nothing changed in the
main.

Note a parallel of abuse. The corporate boardrooms are doing the same thing.
A recent report by Albert Edwards
notes that the increase in corporate
leverage seen recently has been used
almost step for step matched the share
buybacks financed. The corporations
are not making further investments
in plant, equipment, or worker training.
They are gambling, just like the big
banks do with USTreasury Bond carry
trade. Furthermore, much of the most
recent corporate bond issuance has
been devoted to covering the dividend
payouts, in order to take advantage
of upcoming changes in the law. This
is NOT how an economy recovery occurs.
Consume for today and tomorrow be
damned, the American way. See the
Bloomberg article (CLICK HERE).

◄$$$ THE PARADE OF LAWSUITS RELATED TO MORTGAGES CONTINUES UNABATED. THE
TRIFLING SETTLEMENTS TO DATE DO NOT
METE OUT JUSTICE. THE AGGRIEVED SEEK
JUSTICE. TREBLE DAMAGES COULD COME
IN SOME CASES. THE CASES PILE UP,
UNRESOLVED. SOME SETTLED CASES ARE
BEING REOPENED. THE RASH OF MORTGAGE
FRAUD WILL NOT GO AWAY, MAINLY BECAUSE
VERY LITTLE JUSTICE HAS BEEN SERVED.
AT GREATEST RISK IS BANK OF AMERICA, THE PRIMARY NARCO MONEY LAUNDERING BANK.
$$$

The mortgage litigation problem refuses to go away. The big US
banks face a fresh torrent of lawsuits
asserting that they sold impaired
mortgage securities that imploded
during the financial crisis. They
stand to lose much more than the sweet
deals settled in court to date, which
the Jackass has called paltry in settlement
at perhaps 5% to 10% of actual potential
awards. The tens of $billions the
banks have already paid to settle
cases will be dwarfed by what comes.
Some old cases will be reopened, since
they were defended fraudulently as
well. Regulators, prosecutors, investors,
and insurers have filed dozens of
new claims against Bank of America,
JPMorgan Chase, Wells Fargo, Citigroup,
and other banks, linked to over $1
trillion worth of securities backed
by residential mortgages. At risk
is the massive sum of $300 billion
if the firms lose all of the cases
in litigation (court outcomes). Most
cases are open and shut to prove the
fraud. Previous attempts by the banking
industry have been blatant attempts
to corrall the entire mortgage fraud
cosmos without legal grounds. The
mainstream news spin is pathetic,
with warnings that bank profits could
collapse and economic recovery could
be badly hindered. The better solution
is to liquidate the big US banks under RICO
law prosecution, and to distribution
the receivership sales of assets to
the aggrieved homeowners and bond
investors. The USGovt offices would
be quickly freed from corrupt influence.

The banks are battling on three vulnerable fronts. 1) prosecutors who accuse
them of fraud, 2) regulators who claim
that they duped investors into buying
bad mortgage securities, and 3) investors
seeking restitution on buyback of
soured loans. A landmark case is the
lawsuit brought by the Federal Housing
Finance Agency against 17 banks last
year, claiming that they duped the
mortgage finance giants into buying
poor quality securities with horrid
underwriting. Although the case is
high stakes, it pits the USGovt corruption
clearinghouse acid pit versus the
banks which control the USGovt finance
ministry. So a cushy deal will be
struck that creates a precedent, precisely
when the USFed is backing up the truck
to clear the most toxic and fraudridden
of mortgage bonds. The Manhattan courts are proving to be hostile and unsympathetic to the
big banks, denying their motions of
time extensions. But monstrous syndicate
pressure could turn the tide, like
if the judge has a family threatened
or a daughter run over by a car, or
a nanny slit the children's throats
(see the CNBC executive crime scene).
Precedent is aplenty. The big banks
seek a settlement with the agencies
that have colluded for years with
massive mutually beneficial fraud.
Some bank analysts actually believe
the potential losses from mortgage
litigation cases could exceed that
of LIBOR fraud court case losses.
My expectation is that the mortgages
losses will come first, the LIBOR
price rigging second, with greater
losses later. Most experts cannot
see past six months. The Jackass looks
more than a year out.

Several big banks have begun to set aside funds to manage
eventual settlement deals or hostile
judgments. Five in particular have
set aside $22.5 billion as of June
30th just to cushion themselves against
future demands. The more realistic
outlooks foresee future settlements
that will dwarf the payouts awarded
and agreed upon to date. The banks
have settled only a small fraction
of the lawsuits against them. JPMorgan
Chase and Credit Suisse, for instance,
agreed in November to settle mortgage
securities cases with the SEC for
$417 million, but $billions in other
cases remain outstanding. Another
bank at risk is Credit Suisse, which
was accused in November of selling
$11.2 billion in fraudulent mortgage
backed securities. According to the
complaint, the bank dismissed flaws
in the loans packaged into securities,
even while assuring investors that
the quality was sound.

The most wobbly is Bank of America, which could face the death sentence. Its
acquisition of the criminal subprime
lender Countrywide Financial will
prove to be an unending nightmare.
Last year, Bank of America paid $2.5
billion to repurchase troubled mortgages
from Fannie Mae & Freddie Mac,
and $1.6 billion to Assured Guaranty,
which insured the toxic package of
mortgage bonds. The Countrywide fraudulent
pathways to the court rooms continue
to be paved by fresh cases and more
revelations. Lax oversight and
reckless underwriting could be declared
by New York courts, pushing a settlement well beyond $1 billion. At work
is treble damages, since the USDept
Justice sued the bank under a law
that could allow roughly triple the
damages incurred by taxpayers.
All Bank of America attempts to resolve
rafts of mortgage litigation with
an umbrella settlement have run aground.
In June 2011, the BOA criminal organization
agreed to pay $8.5 billion to ward
off investors, including the New York
Fed and PIMCO, after the two firms
lost $billions in outright fraud.
But the case might win reopening,
after being challenged by investors.
Counsel representing the investors
plans to pursue Morgan Stanley and
Wells Fargo next.

An amazing statistic must be cited. Of more than $1 trillion in toxic and
impaired mortgage backed securities
on the table, Bank of America
owns $417 billion from Countrywide
alone, according to an analysis
of lawsuits and company filings. The
bank does not disclose the volume
of its mortgage litigation reserves.
Keep in mind always that Bank of America
is the primary narco money laundering
bank among the big New York banks, with deep pockets. In September 2010, Papa Bush reloaded
their kitty with $13 billion in an
emergency overnight loan that amazingly
was confirmed in identical detail
by two independent Jackass sources,
one from the gold world, the other
from the military security world.
No doubt the source was narco funds
from the aging legendary trillionaire
American success story. The man is
not permitted to be listed among the
Forbes most wealthy even though his
amassed dirty fortune is well over
ten times Buffet or Gates.

Not to be left out, JPMorgan must defend against lawsuits in New York State
Supreme Court directed at Bear Stearns,
which JPM acquired in 2008. Another
potentially costly case for the banks
features demands from a number of
private investors who want the banks
to buy back securities that violated
representations and warranties vouching
for the loans. JPMorgan disclosed
in 2Q2012 that it was contending with
$3.5 billion in repurchase demands.
In the same quarter, it received over
$1.5 billion in fresh demands. This
is a veritable torrent that is an
attack on the Big US Bank equity in
a constant storm. As of Q2, Bank
of America reported that it was
dealing with more than $22 billion
in unresolved demands, with $8 billion
received during that quarter.
The torrent runs broad against the
elite criminal bank sector. See the
New York Times article (CLICK HERE).
May they all be liquidated and have
all assets seized under the RICO law,
which was designed for crime syndicates.

◄$$$ SHIPPING CONTAINERS HAVE BECOME CONDOS IN DETROIT.
THE UNITED STATES HAS LITTLE TO EXPORT
IN TANGIBLE FORM. LIKE LEGOS, THE
NEW URBAN GENTRY DOMICILE EMERGES.
LOOK FOR WALL STREET LEGO BONDS COMING
SOON. $$$

The first multi-family condominium built from used shipping containers is slated
to break ground in Detroit early in 2013. Strong, durable, and portable,
at 20 feet by 40 feet in size, the
shipping containers stack easily and
link together like Legos. About 25
million containers occupy loading
docks, terminals, railways, and truck
lines that supply the nation its goods
in a lifeline. Few return full to
Asia. As they
retire from service in delivering
consumer goods across the United States, designers assemble
them into usable structures. Although
cheap at $2500 per unit, over 90%
of the cost in construction goes beyond
the Trucker Legos. Not only in ravaged
Detroit Michigan,
but also in Amsterdam
for student housing, the chic (kitchi)
tone has seen usage for the cast-off
boxes as artist studios, emergency
shelters, health clinics, even office
buildings. Given how the USEconomy
exports little except toxic bonds,
military hardware, computer system
software, movies, and music, the containers
are collecting around the nation,
from coastal ports to shipyards to
truck terminals. Estimates of the
glut of unused idle cargo containers
widely range from 12,000 to half a
million units. Veteran adaptive container
builder Joel Egan of HyBrid Architecture
in Seattle
coined the term Cargotecture to describe
the method of construction. See the
Yahoo News article (CLICK HERE).

This story serves up irony illustrating the USEconomy. The USGovt exports inflation,
while the USEconomy shed its industry
to Asia. Hilarious
for a moment, sad the next. What is
next, securitized bonds for condo
spaces under bridges, promoted by
Wall Street along with Lego Mortgage
Bonds?? If you are not laughing, you
are probably crying.